Sarah works as a tax accountant for a large accounting firm in Auckland. In her spare time she loves restoring vintage furniture. She has just completed a 1950s sideboard for her own living room. Sarahs neighbour, Lorraine, is an old lady living in a large mansion. She owns many pieces of furniture that are deteriorating quickly due to Lorraines frugal attitude and lack of interest in the furniture. Sarah often chats to Lorraine about selling the furniture to her, but Lorraine always dismissed the idea. However, in May 2020 Lorraine told Sarah that her grandson had purchased her new furniture from Smiths City. Lorraine offered to give Sarah the old furniture, but only if Sarah completed Lorraines tax return for the 2019-2020 tax year.

Sarah accepted the offer. She quickly realised that Lorraine has complicated tax affairs that required her to take one week away from her regular job. She estimates her services to be worth $15,000, and the value of the furniture is worth approximately $10,000. Sarah is content as the furniture gained will keep her busy for the next two years, and their value could triple once restored properly.

Required:

a.) In your own words, explain whether Sarah is assessable to income tax on the consideration she receives (i.e. the furniture) for undertaking the tax services under section CA 1(2) of the Income Tax Act 2007 (income according to ordinary concepts).

b.) In your own words, explain whether by doing the tax services for the neighbour, Sarah could be carrying on a business for income tax purposes.