Gross income is defined in section 1 of the Income Tax Act in relation to any year or
period of assessment, means;
a. in the case of any resident the total cash, or amount received or accrued to or in favour
of such a resident, or
b. in the case of any person other than a resident the total cash, or amount received or
accrued to or in favour of such a person from a source within the Republic;
during such year of assessment, excluding receipts or accruals of a capital nature.1
In terms of the definition provided above, residents are subject to taxation on all their
world-wide income, including earnings from sources outside of South Africa.
b. Amount in cash or otherwise
Liability for income tax arises only if there is an amount in cash or otherwise that the
taxpayer received or has accrued to the taxpayer as was held by the court in Lategan v
CIR.2 The facts of the matter in this case were that a wine farmer sold wine that he made
in the year of assessment for a specific amount. Part of the amount was paid to him before
the end of the year of assessment, and the balance was paid in installments during the
following year.3 The court was called to decide on the question whether the whole amount
qualified as the total amount for the purposes of gross income, or only the part that the
farmer received as cash qualified as gross income.
The court held that the word amount should be given a wider meaning than merely
referring to money, to include the value of every property earned by the taxpayer, whether
corporeal or incorporeal which has a money value. The ratio decidendi of the court was
that where a taxpayer acquires a right during a year of assessment to receive installments
1 Section 1 of the Income Tax Act 58 of 1962.
2 Lategan v CIR 2 SATC 16.
3 Stiglingh M and et al. Silke: South African Income Tax 2021.
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