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Question 1: Income under ordinary concepts Hemi is a design student and a well-known Wellington street artist. In 2015, he started a vlog, commenting on

Question 1: Income under ordinary concepts

Hemi is a design student and a well-known Wellington street artist. In 2015, he started a vlog, commenting on videos of himself painting murals around the city. Fashion stores often sent Hemi clothes and sport shoes in the hope that he would wear them in his videos. Occasionally, Hemi received limited edition sneakers which he sold on Trade Me. After he was charged with criminal graffiti in early 2016, Hemi receives a great deal of publicity, and the number of people viewing his vlog soars.

SkateWorld starts sending Hemi a new pair of limited edition sneakers every month. (Each pair is worth at least $500.) Hemi was approached by MediaMega, a firm which specialises in obtaining advertising for websites. He entered into an agreement with MediaMega to place particular products in his videos, and receives a micro-payment for each person who views his vlog. In December 2016, MediaMega paid Hemi for $10,000 for videos-viewed. This met the costs of hosting his webpage ($1,000) that year and gave him some spare money for his fourth year at university. He was looking forward to a bigger cheque from MediaMega in December 2017 as his blog attracted yet more readers.

Required: Explain whether the sneakers Hemi received from SkateWorld and the money he received from MediaMega in December 2016 would be income under section CA 1(2) of the Income Tax Act 2007 (income under ordinary concepts).

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