Question

Please help!! Barbara is an economist researcher and commentator. The Eco Books Ltd offers her $13,000 for writing a book about economics principles. Barbara has never written a book about economics principles, but accepts the offer and writes the economics book called ‘Principles of Economics’. She assigns the book’s copyright for $13,400 to The Eco Books Ltd. The book is published and she is paid. She also sells the book’s manuscript to the Eco Books Ltd’s library for $4,350 plus several interview manuscripts she has collected while writing the economics book for which she receives $3,200.

Discuss each of the above payments to Barbara separately and states if these are income from Barbara’s personal exertion. (2.5 marks) Would your answer differ if Barbara wrote the Principles of Economics’ book before signing a contract with The Eco Books Ltd in her spare time and only decided to sell it later? (2.5 marks) Support your answer by referring to relevant statutory and case law.

Answer 1

The book which she assigns a copyright and sells it for $13,400, this income is the main income. However, the income which she gets by selling the book's manuscripts to the library (costing $4350) and several interview manuscripts (costing $3200), these are passive incomes. The later income becomes he passive income, as she was not assigned to do this task, but still she did it to earn more income.

Yes these are incomes from Barbara's personal income exertion.

If Barbara had written the book by herself, and decided to sell it later in, then the selling price of the hook would not have remained a personal exertion income. This would have happened as the selling of the book might not be her primary concern, as she later on would have decided to sell, which shows selling books is not her primary income source. Therefore, this would be considered as a passive income. Moreover, she has not been professionally assigned for this task, which again shows this will not be her personal exertion if she decides to write a book and sell it later on.