Taxation Liability of Personal Service Entity

QUESTION 1
Before attending the tax office he wants to know from you whether he has done the wrong thing in not declaring the amounts received for the design of his web pages. You have agreed to give him this advice. Request any further information that you think may be required, explaining why it is required.
In determining if John's actions were appropriate in not declaring his receipts from the web design activities, we must firstly establish if the receipts fall within the definition of assessable income that is either ordinary or statutory income. Section 6-5 of the Income Tax Assessment Act 1997 states, ‘your assessable income includes income according to ordinary concepts, which is called ordinary income’(McLeod & Passant 2001, p9). This broad statement is the only reference or definition of 'ordinary income' within both the ITAA 1997 and ITAA 1936. However, there is a more concise way to determine if receipts are income as established by the courts. To assist in determini...