Exam (elaborations)
TAX2601 Assignment 3 Semester 2 2024 - DUE 2 September 2024
- Institution
- University Of South Africa
TAX2601 Assignment 3 Semester 2 2024 - DUE 2 September 2024 QUESTIONS WITH ANSWERS
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TAX2601 Assignment 3Semester 2 2024 - DUE 2
September 2024
QUESTIONS WITH COMPLTE ANSWERS
[School]
[Course title]
, TAX2601 Assignment 3 Semester 2 2024 - DUE 2 September 2024
QUESTION 1 (12 marks)
Easy Elevators (Pty) Ltd’s (“EE”) core business is the maintenance of elevators in residential and
commercial buildings in the Gauteng region. It has service agreements with each of its customers
and in terms of these, a monthly maintenance fee of R15 000 is payable on or before the seventh
(7th) day of each month before that month’s service occurs. EE is a company incorporated in
South Africa and its year of assessment ends on 31 March. One of EE’s customers paid an
amount of R45 000 into EE’s bank account on 7 March 2024. This amount is for the
maintenance service fees in respect of the following three months i.e. March 2024 to May 2024.
EE was informed by the customer that the building’s caretaker decided to pay three months’ fee
upfront as he would be out of the country for an extended period and wanted to ensure the
maintenance of the elevators would continue as usual during this time. REQUIRED MARKS
Discuss whether the receipt of the R45 000 maintenance service fee would constitute gross
income of Easy Elevators (Pty) Ltd as defined in the Income Tax Act 58 of 1962 for the year of
assessment ending 31 March 2024. List all the gross income definition requirements, discuss
each one and briefly refer to case law to strengthen your argument. 12 4
TAX2601/2024/Semester 2/Assessment 3
To determine whether the R45,000 maintenance service fee constitutes gross income for Easy
Elevators (Pty) Ltd (EE) for the year of assessment ending 31 March 2024, we need to analyze
the situation using the definition of "gross income" as provided in the Income Tax Act 58 of
1962 and relevant case law.
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