Frank Rizzoli is a famous chef. He has a restaurant in Toorak, an exclusive inner suburb of Melbourne close to the Melbourne CBD. Over the past couple of years, business conditions have been difficult in the hospitality/entertainment industry. Recently, Frank has been talking to his best friend Alberto, who is a well-known entertainment promoter, that after 30 years of friendship they should collaborate on an exciting new project. Frank and Alberto agreed that every Saturday night, during the evening dinner service at Frank's restaurant, Alberto would arrange for a famous entertainer to perform for the dinner patrons. This arrangement worked well for six months, and famous entertainers such as Bruce Springsteen, Jimmy Barnes, Michael Buble and Elton John performed at Frank's restaurant. Frank's restaurant was very profitable and getting favourable reviews in the media. Just as things were going well, Alberto was called away to the USA on urgent business and left the booking of entertainers to his assistant, Louie. Frank's mother became seriously ill and Frank had to travel interstate to help her. Before Alberto left for the USA he told Louie to book someone 'famous' each week for Frank's restaurant. Louie's connections in the entertainment industry were not as extensive as Alberto's. Louie started booking local entertainers for Frank's restaurant that he found from walking around the local pubs in Melbourne. The standard of entertainment at Frank's restaurant plummeted. Frank's profits from his restaurant business had reduced significantly. Frank returned to his restaurant one Saturday night to find his dinner patrons being entertained by burlesque dancers. Frank was shocked. Frank sued Alberto for $1m in lost profits. Frank's problems with his restaurant were reported in the media. Alberto appeared at a televised press conference, and when asked about the media reports he responded by saying: "Who cares about Frank's restaurant. The food is rubbish anyway. I wouldn't eat there". Frank closed his restaurant and immediately lodged a further claim against Alberto, seeking $2m in damages for defamation causing loss of reputation. Alberto could not afford to go to Court. It took six months for Alberto to settle the claims. On 1 June 2021 Frank received a compensation payment of $1.5million from Alberto in settlement of both claims in full. At the same time, Frank opened a new restaurant at a new location on the Mornington Peninsula. His wife Melita, who was a famous TV personality, managed the business. Business at the new restaurant improved quickly and considerably.

Required: Using relevant legislation and case law, explain to Frank whether the compensation payment constitutes ordinary income. payment constitutes ordinary income.