Summary
Taxation - Gross Income Summary
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GROSS INCOMERESIDENCY
Ordinary Residency - STEP 1
• (Levene v IRC1928 AC) - A person’s ordinary regular course of life is to live in a place with some permanence .
• (Cohen v CIR 13 SATC 362)- Naturally return from their wanderings & in contrast to other countries, call home.
• (Cohen v CIR 13 SATC 362) - Even if they are physically absent throughout the year of ass. in question.The person’s
mode of life outside that year of assessment must be considered .
• (Soldier v COT 1943 SR) - The place of residence must be settled and certain, not temporary and casual.
• (H v COT 1960 SR) - Permanent place of abode is situated,where their belongings are stored which they left behind
during temporary absences and to which they regularly returns after these absences .
• (CIR v Kuttel 1992 AR) Where they normally reside, apart from temp. and occasional absences.
• Resident in the Republic from the date they became ordinarily resident, not for the full year of assessment.
• If ceasing ordinarily residency in the Republic, they will be non-residents from the following day.
Physical Residency - STEP 2
• 91 days during the relevant year of assessment; and
• exceeding 91 days in aggregate during each of the five years of ass. before (resident in 6 year of ass.); and
•exceeding 915 days in aggregate during such five preceding years of ass.
•If physically absent for a continuous period of 330+ full days, they are immediately no longer physically resident.
COMPONENTS OF INCOME
1. Total amount in cash or otherwise
* (Lategan vs Commissioner for Inland Revenue) - Every form of property earned by the taxpayer, whether
corporeal or incorporeal which has a money value received is revenue.
2. Received by
*(Geldenhuys vs Commissioner for Inland Revenue) - Money must be received for own benefit
*(Pyott Ltd vs Commissioner for Inland Revenue) - Money is not received if there is an obligation to pay
it back (loans etc.)
*( C.F.I.R vs witwaterstrand Association of Racing Clubs) - An amount beneficially recevied by or accrued
(entitlement) to it is taxed even if the taxpayer has an obligation to pay it over to somebody.
*(MP Finance group CC vs CSARS) - Illegal receipts & ill-gotten gains are still taxed
*(C.F.I.R vs Belogoa Bay Ciggarette Co. Ltd) - Expenditure incurred in illegal production may qualify as a
deductable expense.
3. Accrued to
*( CIR vs People Stores Pty Ltd) - Accrual means to become entitled to
* (Mooi vs SIR)- Conditional entitlement would not constitute an accrual until the condition is satisfied.
4. Year of assessment
*Revenue must be received or accrued within the financial year.
5. Excluding amounts that are capital in nature
SUBJECTIVE TEST OBJECTIVE TEST
*(CIR v Visser 8 SATC 271) Capital is compared to a tree * Manner of acquisition
and revenue to the fruit of the tree * Manner of acquisition
*(SIR vs Trust Bank of Africa) The intention of the taxpayer * Manner of disposal
at acq. determines if the tax payer has embarked on *period for which the asset is held
a profit making scheme. * Continuity
*(CIR vs Stott 3) The mere fact that the taxpayer decides * The taxpayer's occupation
to sell at the best price does not change their intentions. * Nature of the asset disposed of
* ( John Bell v SIR) something more is required to change * Reason for the receipt
the character of the asset * legal nature of the transaction
* (Malan vs KBI) The court must consider the taxpayer's * The taxpayer's activities
evidence concerning his motives. *Accounting treatment of the transaction
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