I. George is manager of Newcastle Steel Ltd. His contract is for 10 years. In the third year George enters into a restrictive covenant which provides that during the remainder of his contract he must not reveal or use confidential information other than to his employer. It further provides that he must not work for a competitor during the remainder of the employment agreement. Consideration for entering into the agreement is $40,000. Is this capital or income in Georges hands?

II. Advise Cheryl of her tax consequences from the following transactions:

(a) Donation of $300 to the building fund of her local public primary school.

(b) Donation of $50 to her local public library (as a result she does not need to pay membership fees of $20 that year to borrow books from the library).

(c) Payment of $700 membership fees to the real estate agents' association. Cheryl is a professional real estate agent but she has not been working as one for the last two years following the birth of her child. However, she maintains her membership of the association as she intends to go back to work one day.