Marissa Morton Case Study, Vanuatu Bank Account & Financial Assets In Australia - Accounting Assignment Help

Assignment Task

QUESTION 

Marissa Morton (born in Australia) is a lecturer in computer programming and works on the Vanuatu campus of an Australian university. In February 2021, Marissa relocated to the university’s Melbourne campus on a fixed-term eighteen-month appointment. The relocation was very smooth for Marissa as she has family, friends, and financial assets in Australia. The Melbourne campus of the university provided Marissa with a salary A$120,000 per annum. This salary is paid directly into her Vanuatu bank account.

While in Australia, Marissa and her colleague Scott were approached by Microtech to develop plagiarism detection software under the terms of a ‘software development contract’. The ‘software development contract’ stipulates that both Marissa and Scott are paid $2,800 each per month and this payment requires Microtech to undertake all sales activities and to receive all sales income until 31 July 2021, however it does not include ownership of the software.

In April 2021, Marissa was advised that her fixed-term Australian contract with the university was not going to be renewed due to Government funding cutbacks. Marissa subsequently entered into an arrangement with Scott where Scott paid Marissa a lump sum of $70,000, and Marissa assigned Scott her future rights to payments from Microtech.

On 1 June 2021, it was discovered by Marissa, that Scott copied (that is, plagiarised) the software programming code from a rival competitor that offered a similar plagiarism detection program. Once plagiarism was proven, Microtech cancelled the contract with Marissa and Scott. Owing to the negative publicity arising from plagiarism, Marissa took legal action against Scott and he paid damages of $50,000 to Marissa. The compensation agreement stated that $30,000 was attributed to damage to Marissa’s reputation; and $20,000 attributed to Marissa’s contribution to the software code that is now worthless.

Marissa subsequently decided to sell the plagiarism detection software. To do this, Marissa re-wrote Scott’s plagiarised portion and to maximise the value of the software, she added additional features to the software. On 30 June 2021, Marissa sold the software to a university for $30,000.

Required:

Q1-Citing relevant case law and legislation to support your answer, advise Marissa Morton as to whether the above transactions constitute assessable income for her for the 2020-21 tax year.

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