Reference no: EM133809446

Question

Tim works in marketing. In January 2020, as Covid-19 started to become more widespread globally, Tim saw an opportunity to be entrepreneurial. His mother, who was a doctor had recently retired from her private practice. Tim had offered to help her clear out her practice and to dispose of all the items that she no longer had any use for. Among these items were personal protective equipment (PPE) such as face masks. As Tim's mother had no other purpose for the PPE, and wanted the storage space for other items, she was happy to let Tim have the PPE for free. Tim immediately sold these items of PPE to his friends for a relatively modest amount. In a separate transaction, Tim made a large order of masks from China at a low price. Therefore, by the time Covid-19 became more widely spread in NZ, Tim was able to start selling his masks online on a website he created, and make a significant profit. Tim was only able to do this once, as his supplier was no longer able to ship the masks to New Zealand. Required a) Explain if either of the two transactions outlined above would constitute income under section CB 3 of the ITA 2007.