Question

Robin is a scientist and on 15 May 2020 she received compensation of $80,000 for wrongful dismissal from her former employer, LabexPty Ltd. The compensation was to reimburse Robin for lost wages as a result of the dismissal. On 20 May 2020, Robin received $10,000 for agreeing to enter into a two-year contract to work with Johnson & Co Pty Ltd and she started working for them on 10 July 2020. While she was between jobs, she did some part-time work as a consultant and earned a net amount of $1,700 after PAYG withholding of $800 was deducted.

Based on the above transactions, what amount will Robin include in her assessable income for the year ended 30 June 2020? Explain your treatment of each item.

Answer 1

Calculation of total assessable Income :

Particular	Amount ($)
Wrongful dismisaal	80000
Amount for entering into two year contract	10000
Part time work consultant Amount	2500
( 1700 + 800 )
Total Assessable Income	92500

Expalantions :

1) Compensation of wrongful dismissal $ 80000 since this is a reimbursement of lost wages .

2) Amount received after entering into two year contract $ 10000 since this amount has been received and hence to be considered .

3) Amount earned from part time work consultant $ 2500 , since $ 1700 is net of withholding $ 800 , this withholding should also be considered while calculating total income ( 1700 + 800 = 2500 )