[Date]
TAX2601 Assignment 3
Semester 2 2024 - DUE 2
September 2024
QUESTIONS WITH ANSWERS
, 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 receipt of the R45,000 maintenance service fee by Easy
Elevators (Pty) Ltd (“EE”) constitutes gross income for the year of assessment
ending 31 March 2024, we must analyze the transaction using the definition of
"gross income" as provided in section 1 of the Income Tax Act 58 of 1962. The
definition is as follows:
TAX2601 Assignment 3
Semester 2 2024 - DUE 2
September 2024
QUESTIONS WITH ANSWERS
, 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 receipt of the R45,000 maintenance service fee by Easy
Elevators (Pty) Ltd (“EE”) constitutes gross income for the year of assessment
ending 31 March 2024, we must analyze the transaction using the definition of
"gross income" as provided in section 1 of the Income Tax Act 58 of 1962. The
definition is as follows:
