Gross income (case law) Flashcards
(35 cards)
State two case law related to ordinarily residences of a natural person
- Cohen case
- Kuttel case
- Physical presence test
Elaborate on the Cohen case
- “though a man may be ‘resident’ in more than one country at the same time, he can only be ‘ordinarily resident’ in one’ -Schriener JA
- it would be natural to interpret ‘ordinarily’ by reference to the country of his most fixed or settled residence
- but his ordinarily residence would be the country to which he would naturally and as a matter of course return from his wanderings
- as contrasted with other lands it might be called usual or principal residence
- would be described more aptly than other countries as his real home
- a person can be ordinarily resident in a country which he was absent throughout the year of assessment
Elaborate on Kuttel case
A person is ‘ordinarily resident’ where he ahs his usual/principle residence
Explain when will a natural person be regarded a ordinarily resident according to the physical presence test
A natural person is a resident of the republic if he was physically present in SA for a period(s) exceeding:
- 91 days in aggregate during the current year of assessment; and
- 91 days in aggregate during each of the 5 years of assessment preceding the current year of assessment; and
- 915 days in aggregate during the 5 preceding years of assessment
When will a natural person not be regarded as ordinarily resident under the physical presence test?
When they have been absent from the Republic for a continuous 330 days.
The days are inclusive of prior year of assessment as while as current.
Which cause laws follow under “total amount of cash or otherwise”?
- Lategen case
- Butcher bros case
- Brummeria Renaissance case
State the principle of the Lategen case (total amount of case or otherwise)
Amount should be given a wider meaning to only include cash but the vale of the every form of property earned by the taxpayer, whether corporeal or incorporeal, as long as it has a monetary value
State the principle of Butcher bros
No amount was received or accrued if it has does not have an ascertainable monetary value at the time
State Brummeria renaissance principle
a right that cannot be transferred or actually incurred into money can still have a monetary value; quid pro quo
Which are cases that follow under “received by”?
- Geldenhuys
- MP Finance Group Co
- Delagoa Bay Cigarette
- Pyott
Disclose Geldenhuys principle
An amount received by a taxpayer must be for the taxpayers benefit to include in gross income
Disclose MP Finance Group Co ltd case principle
An illegal contract is not without legal consequences and despite of legal obligation to refund an amount - an amount accepted with the intention to retain the amount for the taxpayers own benefit
Disclose the principle of Delagoa Bay cigarette co case
The legal or illegal nature of a corporation does not determine whether its income should be subject to tax
Disclose the principle of Pyott case
Amount received that might be refundable to customers will be included in gross income if it is not “trust money” ( meaning funds paid into the normal business account= gross income but money kept in a separate account not included in gross income)
What are case of “accrued to”?
- Lategen
- People stores (Walvis Bay) (Pty) ltd
- Witwatersrand association of racing club
- Mooi
State the principle of Lategen (accrued to)
If a taxpayer acquires a right in the current year to amounts that will be paid to you instalments during subsequent years - present value of all amounts in gross income in current year
State the principle of People stores (Walvis Bay) case
Does not have to be due or payable - amount will accrue if a right to future payments vests in the taxpayer
State Witwatersrand association of racing club case principle
An amount accrues if a taxpayer becomes entitled to the proceeds and a moral obligation to hand over the proceeds to the charity (PBO) cannot destroy the beneficial character of the receipt
State the mooi case principle
A right only accrued to the taxpayer when the conditions were fulfilled and the right become exercisable - entitlement is unconditional
What are the case of “not of capital nature”?
- Elandsheuwel farming
- Richmond estate
- Levy
- Pick and Pay employees share purpose trust
- Stott
- Nel
- John Bell
- Natal Estate
- Berea West Estate
- Founders Hill
- Nussbaum
- George Forest Timber co ltd
- Visser
- WJ Fourie Beleggings
- Stellenbosch farmers winery
Disclose the principle of Elandsheuwel farming case
The shareholder’s intention should be attributed to the company itself
- lifting of the corporate veil
Disclose the principle of Richmond estate case
In evaluating intention you would consider the company’s memorandum of association and formal resolution of the company’s directorate
Disclose the principle of Levy case
Where the purpose of the taxpayer is mixed - one should seek and give effect to the dominant factor
Disclose the principle of Pick and Pay employees share purpose trust case
For a receipt to be revenue, it is not sufficient for the taxpayer to carry on business. The business should also be conducted with profit making purpose as well
