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Schubert, Mahler and Tull are resident Australian seamen employed on the fishing trawler MV St Cecilia. Whilst on a routine fishing operation the captain of St Cecilia heard a radio message that SS Titan, an abandoned oil tanker about 20 nautical miles to the south was drifting towards the Australian coast. The vessel was badly holed, leaking oil and with present currents and tidal situations it was drifting towards a coral reef a short distance from a stretch of environmentally sensitive coastline. If the tanker wrecked on the reef the environmental and economic consequences would be enormous.
Tull sold the video to Channel 9 for $8,000 and it was shown exclusively on that station throughout Australia. Later that year he was paid $50,000 to travel to the USA to provide technical advice on a proposed telemovie of the event tentatively entitled ‘Aqualung'. He plans to stay in the US indefinitely and pursue other filmmaking opportunities.
(a) Describe what is meant by ‘income by ordinary concepts'.
(b) Advise what tax consequences arise in respect of the payments to Mahler, Schubert and Tull.
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