QUESTION ONE: Income

Valerie is a famous amateur New Zealand shot putter (sportsperson). She has won the World Championship for her sport four times, and she has won two Olympic medals and three Commonwealth Games medals. Valerie has been shot putting since she was a child. She is now 30 years old. She spends at least three hours a day training during the week, as well as all weekend.

When Valerie left school she went to university and became an accountant. However, in the past three years she has only been able to work part-time (15 hours per week) as she has become more successful at her sport. She has managed to support herself through corporate sponsorship and prize money received (e.g. she received $50,000 for each Olympic medal).

Required:

Explain if:

(a) Valeries sponsorship and prize money would constitute income under ordinary concepts.

(20 marks)

(b) Valeries sponsorship and prize money would constitute business income.

(15 marks)