TAX2601
ASSIGNMENT 1
DUE DATE: 4 SEPTEMBER 2026
, TAX2601 ASSIGNMENT 1 2026
DUE 4 SEPTEMBER 2026
QUESTION 1 Portia Financial Advisory (Pty) Ltd (“PFA”), a South African resident
company that provides financial advice and investment services to clients. PFA
has a financial year ending on 28 February.
QUESTION 1
Discussion: Is the R1 million held in trust included in gross income?
Requirement Discussion
1. Total amount in The R1 million is a cash amount paid to PFA on 1 June 2025.
cash or otherwise The amount is ascertainable and quantifiable.
2. Received by, The amount is received by PFA, but applying the principle
accrued to, or in in Geldenhuys v CIR (14 SATC 419), an amount is only
favour of “received” if it is for the taxpayer’s own benefit. PFA holds the
funds in a separate bank account and is contractually obliged
to return any uninvested portion. It acts as an agent/trustee,
not as the beneficial owner. Therefore, the amount is NOT
received for PFA’s own benefit.
3. Year of assessment If it were taxable, it would fall into the 2026 year of
assessment (1 March 2025 – 28 February 2026). However,
because the “received” requirement is not met, this criterion is
not reached.
4. Excluding amounts The R1 million is not capital in nature to PFA, but this is
of a capital nature irrelevant as the amount fails the “received” test.
Conclusion The R1 million is not included in PFA’s gross income. Only
the 5% fee on returns generated will constitute income.
(Reference: LU 4 Gross Income Definition)
ASSIGNMENT 1
DUE DATE: 4 SEPTEMBER 2026
, TAX2601 ASSIGNMENT 1 2026
DUE 4 SEPTEMBER 2026
QUESTION 1 Portia Financial Advisory (Pty) Ltd (“PFA”), a South African resident
company that provides financial advice and investment services to clients. PFA
has a financial year ending on 28 February.
QUESTION 1
Discussion: Is the R1 million held in trust included in gross income?
Requirement Discussion
1. Total amount in The R1 million is a cash amount paid to PFA on 1 June 2025.
cash or otherwise The amount is ascertainable and quantifiable.
2. Received by, The amount is received by PFA, but applying the principle
accrued to, or in in Geldenhuys v CIR (14 SATC 419), an amount is only
favour of “received” if it is for the taxpayer’s own benefit. PFA holds the
funds in a separate bank account and is contractually obliged
to return any uninvested portion. It acts as an agent/trustee,
not as the beneficial owner. Therefore, the amount is NOT
received for PFA’s own benefit.
3. Year of assessment If it were taxable, it would fall into the 2026 year of
assessment (1 March 2025 – 28 February 2026). However,
because the “received” requirement is not met, this criterion is
not reached.
4. Excluding amounts The R1 million is not capital in nature to PFA, but this is
of a capital nature irrelevant as the amount fails the “received” test.
Conclusion The R1 million is not included in PFA’s gross income. Only
the 5% fee on returns generated will constitute income.
(Reference: LU 4 Gross Income Definition)
