During the financial year James, a full-time science teacher received the following amounts:

Salary income from working as a teacher $90,000

Winnings from entering an art competition $1,000

Rental income $26,000

An award for teacher of the year $10,000

What is Jame's assessable income

Question

During the financial year James, a full-time science teacher received the following amounts:

Salary income from working as a teacher       $90,000

Winnings from entering an art competition    $1,000

Rental income                                                    $26,000

An award for teacher of the year                    $10,000

What is Jame's assessable income

BlackTom AI · Accepted Answer

Let's break down the components of Jame's assessable income as given in the scenario and evaluate each option in turn.
Option 1: $126,000
This total would imply that one of the four listed amounts is not being included in assessable income. If we had to justify $126,000, we might be excluding either $1,000 (art competition winnings) or $10,000 (teacher of the year award). However, in most tax frameworks, prize winnings (including art competition winnings) are considered assessable income unless a specific exemption applies, and a cash award related to employment typically remains assessable as well. Therefore, excluding a portion of the listed items is not appropriate here.
Option 2: $127,000
This sum corresponds to adding all four amounts: $90,000 (salary), $1,000 (art competition winnings), $26,000 (rental income), and $10,000 (teacher of the year award). The reasoning is that each of these sources represents money received that generally falls within assessable income: salary is ordinary employment income; prize or winnings from a competition can be taxable as income; rental income is taxable and must be included in gross income; and an employment-related cash award is typically included as income for tax purposes. Therefore, totaling all four items to reach $127,000 is consistent with including all assessable components provided.
Option 3: $116,000
This total would be obtained if two items were omitted or one item was counted at a reduced amount. For example, if rental income ($26,000) were excluded and the rest counted, the total would be $90,000 + $1,000 + $10,000 = $101,000, not $116,000. If instead the prize were excluded, the sum would be $126,000. None of these align with $116,000. Thus, $116,000 does not correspond to a correct summation of the described components given typical tax treatment.
Option 4: $91,000
This would be simply the salary income ($90,000) plus perhaps a minimal adjustment, but it ignores the other sources of assessable income (art prize, rental income, and the award). Since multiple other income items are clearly stated as received during the year, excluding them yields a value that is inconsistent with the full information provided. Hence, $91,000 is not a correct total.
In summary, the correct approach is to include all items that constitute assessable income unless a specific exemption applies. The four amounts given—salary $90,000, art competition winnings $1,000, rental income $26,000, and teacher of the year award $10,000—sum to $127,000. The other options fail because they either omit one or more taxable components or miscalculate by excluding items that should be included. The reasoning for each incorrect choice hinges on whether an item is inappropriately left out or miscounted, which would not align with standard tax treatment of these income sources.

77938 Introduction to Taxation Law - Spring 2025 Assessment 1: Multiple Choice

During the financial year James, a full-time science teacher received the following amounts: Salary income from working as a teacher $90,000 Winnings from entering an art competition $1,000 Rental income $26,000 An award for teacher of the year $10,000 What is Jame's assessable income

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