All of the facts in this scenario relate to the 20202021 income year of Patricia Mills, an Australian resident individual. Patricia is a well-known professional basketball player. Since 2016, she has been the captain of the Brisbane Dames. Patricia sustains a career-ending knee injury in February 2021. As a result, her contract with the Brisbane Dames ends. Her employment entitlements from the Brisbane Dames for the period 1 July 2020 to 28 February 2021 comprises of a gross salary of $180,000.

In April 2021 she asks her manager to commence negotiations with the Australian Mens Basketball Association (AMBA). AMBA is in the process of appointing a new coach for the national team. Patricias manager makes a compelling case that she is a suitable candidate for the job, and she is shortlisted for the position. In May 2021 she travels to Melbourne to attend interviews and meetings with the AMBA board. She incurs the following expenses to do so:

A return business class flight ticket from Brisbane to Melbourne at a cost totalling $2,390. The cost of an economy return flight ticket would have been $550.

Hotel accommodation for five nights at a cost totalling $2,500.

The cost of restaurant meals totalling $785.

The cost of three new business suits totalling $1,800 to wear to the interviews and meetings.

On 1 June 2021 the AMBA board holds a press conference, announcing Patricias appointment as the first female coach of the Australian mens basketball team. AMBA emphasises that Patricia was appointed on merit and that her three-year employment contract is based on similar terms to that of high-profile male coaches. These are the terms of her AMBA employment contract:

She receives a lumpsum payment of $100,000 on 1 June 2021 when she signs the contract.

She receives a one-off payment of $50,000 on 1 June 2021. In return, she agrees to only grant one-on-one media interviews to the two television networks that are AMBA broadcast sponsors.

She will be paid a monthly salary of $35,000 from 1 July 2021 when she commences her duties.

She can honour the existing brand ambassador contracts she has with several sports equipment companies that her manager had previously negotiated on her behalf. During the 20202021 income year, Patricia receives $70,000 from these sports equipment companies for performing her duties as their brand ambassador.

On 1 June 2021, Patricia pays her manager a lumpsum totalling $65,000 as his fee for negotiating her contract with AMBA.

1. What is the value of Patricias assessable income for the 20202021 income year?

		$180,000
		$250,000
		$400,000
		$350,000
		$435,000

2.From her managers perspective, what is the correct income tax treatment for the lumpsum that Patricias manager receives from her?

		The receipt is not ordinary income to him as this is a lumpsum, not a regular or periodic receipt
		The receipt is not ordinary income to him as it is capital in nature
		The receipt is not ordinary income to him due to the precedent in Scott v FCT
		The receipt is ordinary income to him using the provisions of s 6-5 ITAA97