GROSS INCOME

Question 1

Unquantified amounts

Answer 1

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• If disposal or receipt of an asset consists of an unquantifiable amount the unquantifiable portion will be deemed not to have accrued to that person in that year and is deemed to be accrued in the year that the amount becomes quantifiable.

Question 2

Total Amount (2)

Answer 2

• Lategan “all form of property” “money Value”

* Butcher Bros “expressible amount”

Question 3

In Cash or Otherwise (3)

Answer 3

• Brummeria “ascertainable monetary value” (Quid Pro Quo i.e. interest free loan in exchange for no rental)
• Delfos “convertible into money”
• Lace Proprietary Mines “intention needs to be known”

Question 4

Received by (4)

Answer 4

• Geldenhuys “own behalf & benefit”
• Genn “amounts borrowed”
• MP Finance Group “intended to receive for own benefit”
• Pyott “deposits for own benefit – included” “amounts refundable”

Question 5

Accrued to (3)

Answer 5

• WITS “legal obligation for amounts received for another”
• People’s Stores “accrued = entitled to payment”
• Mooi “accrued = unconditionally entitled”

Question 6

Capital vs. Revenue:
Defining Characteristics (3)

Answer 6

• Visser “tree vs. fruit”
• George Forest Timber “floating vs. fixed capital”
• WJ Fourie Beleggings “Income earning structure”
• Burmah Steamship “amount to compensate loss of profit = revenue in nature”

Question 7

Capital vs. Revenue:

Intention (4)

Answer 7

• Pick n’ Pay “profit making scheme”
• Richmond Estates “nature = intention on disposal”
• Stott “Intention on acquisition”
• Levy “dominant intention must be determined”

Question 8

Capital vs. Revenue:
Intention Change (6)

Answer 8

• Stott “realising at best advantage – not necessarily revenue”
• John Bell “more than a mere decision to sell to render revenue”
• Natal Estates “crossing the Rubicon” (Has infrastructure been implemented? In business-like manner?)
• Berea West Estates “realization companies”
• Founders Hill
• Nussbaum “secondary purpose can be taxed”

Question 9

Capital vs. Revenue:

Factors Determining Intention

Answer 9

• Actions of directors – Richmond Estates
• Length of time held
• Frequency – Stephen “a single transaction can constitute scheme of PM”
• Nature of TP’s business
• Income stream
• Reason for sale
o Nel “first time doesn’t mean it is not a profit making scheme”
o Nussbaum
• Finance
• Nature of asset

Question 10

Capital vs. Revenue: Onus is on?

Answer 10

• Onus of proving “capital in nature” rests on the taxpayer in terms of s102 of the Tax Act

Question 11

Damages & Compensation (1)

Answer 11

• WJ Fouries Beleggings “crippling cancelled contracts”
• Burmah Steamship “amount that fill holes in profit vs. pockets”
• Stellenbosch Farmers’ “significant contract is part of Cap. Structure”