Lyla Apothecary worked as a trainee pharmacist on the weekend and during university holidays for the past 3 years. The average annual earnings were $30,000 per year. Lyla expected to continue this work arrangement until the end of the year which was her final year of study. Her employers had indicated they would like her to continue as a graduate pharmacist on graduation Expenses incurred during the last year included:
o Dry-cleaning uniform, replacing uniform were $800
o Travel costs associated with travel from home to pharmacy $1000
o Books and pharmacy related study expenses $1200
o HECS-HELP debt $16,000.
In February Lyla slipped while cleaning the dispensary and suffered injuries which prevents her from working for longer than 6 hours in any day and as she cannot work a full day her employer terminates her employment.
Lyla commences legal proceedings against her employer terminating her employment and for injuries she has suffered due to the alleged negligence of her employer. Lyla is offered $100,00 for her injuries and four annual payments of $18,000 each in respect of the termination of her employment.
Required:
Advise Lyla of the taxation consequences of these transactions for the year, including if Lyla were to accept the offer.