LML4804 ASSIGNMENT 01 ANSWERS DUE 26 AUGUST 2024.
ASSIGNMENT 01
QUESTION 01 (Gross-income)
1.1
Freedom Movement Party (FMP) is a newly established political party which was registered to contest 2024 National and Provisional elections. It concluded a contract with Green Print Media House (Pty...
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LML4804 ASSIGNMENT 01 SEMESTER 02
DUE 26 AUGUST 2024
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, ASSIGNMENT 01
QUESTION 1(Gross-income)
Freedom Movement Party (FMP) is a newly established political party which
was registered to contest 2024 National and Provisional elections. It concluded
a contract with Green Print Media House (Pty) Ltd (GP Media House). In terms
of the contract, GP Media House had to print 3000 3D posters on behalf of FMP
depicting the image of its leader for its campaign. GP Media House was also
expected to air FMP political advertisements through its media partners on
radio stations and television. On April 2024, FMP paid a deposit of R150 000
and undertook to pay the remainder amount on 30 June 2024. After the
conclusion of national elections, FMP reviewed its performance on the national
elections and noted that it did not accumulate enough votes it hoped for. A
report from the external service provider appointed by FMP to investigate its
poor performance, concluded that FMP did not reach large audience.
On August 2024, FMP wrote a letter to GP Media House notifying the company
that it will no longer pay the outstanding amount to GP Media House and it
also considered its options to sue the company for its failure to honour the
contractual obligations between the parties. As part of the contractual
obligation between the parties, FMP learned that GP Media house failed to air
its political adverts on radio station and television according to the agreed
dates. It transpired that FMP political advert was only aired on radio station
and television a day prior the date of the national elections. GP Media House
referred the matter to court to demand the outstanding amount owed by FMP.
The matter was set down for hearing for 05 October 2024.
WHAT IS REQUIRED OF YOU?
With reference to tax law and case decision, discuss whether the deposit paid
and the outstanding amount still owed by FMP will be included in the Gross
Income of GP Media House.
QUESTION 01
1.1
To determine whether the deposit paid, and the outstanding amount owed by the
Freedom Movement Party (FMP) will be included in the Gross Income of Green Print
Media House (GP Media House) under South African tax law, we need to refer to the
definition of "gross income" in section 1 of the Income Tax Act, as well as relevant
case law. Section 1 of the Income Tax Act defines "gross income" as: "the total
amount, in cash or otherwise, received by or accrued to or in favour of such resident
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