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Jason is in the business of importing soccer balls from Taiwan and selling them in Australia.

On 25 March, Jason purchased $20,000 worth of soccer balls from Taiwan. Jason did not have ownership of the soccer balls until they were unloaded from an aircraft in Australia on 15^th April.

In April, Jason took 50 soccer balls from his stock to give to a creditor in satisfaction of a debt of $2,000 that Jason owed to that creditor. In total the soccer balls had cost Jason $1,000 and he usually would have sold them for $2,500.

After a few weeks of steady sales, Jason decided to hold a winter sale in May. The sale was a huge success and he completely sold out of stock within a few days. Jason sold the stock for $28,000. The stock had cost him $14,000 in total and he would normally have sold it for $35,000.

Following the sale, Jason bought 100 soccer balls which were of a new design. Those soccer balls cost $30 each and Jason expects to sell them for $75 each. Because he is so excited about the new design, he keeps one soccer ball for himself.

Advise Jason as to the following:

(a)Is the purchase of the soccer balls deductible? If so, when would he be able to deduct the purchase?

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(b)What are the tax implications of Jason taking 50 soccer balls from his stock to give to a creditor in satisfaction of a debt of $2,000?

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(c)Are the proceeds of sale assessable under s6-5 or s70-90?

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(d)What are the tax implications of Jason keeping a soccer ball for himself?

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