Murray George is a professional musician and composer. For 15 years, he has made a good living from this profession. He derives his income from concert appearances (for substantial fees) and from royalties on original musical compositions.

As of 20X0, George has been internationally famous in the classical music field. In 20X1, the Canadian National Music Library agreed to purchase a number of documents from him. These documents included:

(a) 26 of George’s original manuscripts, written in his own hand;

(b) a box containing 15 of his youthful works, including first drafts and final versions; and

(c) a copy of George’s personal diary, to be exhibited to the public only after his death.

For these items, he received $50,000, to be paid in the amount of $30,000 in 20X1 and $20,000 in 20X2. Over the years, the compositions (other than his youthful works) had generated income from royalties, which George had declared as professional income for tax purposes.

The Canadian National Music Library is not a commercial enterprise. It is a registered charitable foundation. Before filing his 20X1 tax return, George obtained the CRA’s advice on how the receipt of $50,000 should be handled. Their response was that the $50,000 clearly represents business revenue and should be added to his professional earnings in 20X1.

Required:

State whether you agree or disagree with the CRA’s advice, and provide reasons for and against your position.