LML4804 Assignment 1 -Income Tax Law.
Question 1
In order to advise Mofokeng if the proceeds of the sale of the fixed property must be
included in his gross income for the 2016/2017 year of assessment one has to start by
analysing the definition of gross income and it various aspects.
“Gross...
In order to advise Mofokeng if the proceeds of the sale of the fixed property must be
included in his gross income for the 2016/2017 year of assessment one has to start by
analysing the definition of gross income and it various aspects.
“Gross Income”
“Gross income” is defined in Section 1 of the Income Tax Act 58 of 1962 which reads
as follows: “‘gross income’ in relation to any year or period of assessment, means, i) in
the case of any resident, the total amount, in cash or otherwise, received by or accrued
to or in favour of such resident, or ii) in the case of any person other than a resident,
the total amount, in cash or otherwise, received by or accrued to or in favour of such
person from a source within the Republic, during such year or period of assessment,
excluding receipts or accruals of a capital nature, but including, without in any
limiting the scope of this definition, such amounts (whether of a capital nature or not)
1
so received or accrued as are described hereunder”
.
From the facts in the question and the definition it is clear that in order to determine if
the proceeds forms part of Mofokeng’s “gross income” one has to determine:
whether or not the proceeds is an amount in cash or otherwise;
was Mofokeng is a resident for income tax purposes;
if the proceeds accrued to Mofokeng during the 2016/2017 year of assessment;
if the proceeds for the sale of the fixed property was capital in nature;
if the proceeds are of a capital nature; and
if there is any special inclusions for the amount in gross income.
An amount in cash or otherwise
Even though the definition of “gross income” specifically states “the total amoun
cash or otherwise” the definition would have included not only money but also
monetary value of property, corporeal or incorporeal, as the term “amount” inclu
both. In the case of CIR v Delfos the court held that “…tax is to be assessed on all
2
receipts and accruals having a money value…”
. From the Lace Proprietary Mines Ltd
v CIR case is clear that the general principle is, that if a taxpayer receives an amount
1
Section 1 of the Income Tax Act 58 of 1962
2
SILKE: Income Tax Volume 1 16
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