, TAX2601 Assignment 1 (COMPLETE ANSWERS)
Semester 1 2025 - DUE 7 April 2025
Mr Xhumalo lives in Gqeberha, South Africa. He manufactures and sells
various grass baskets and placemats from a street stall. Due to the high
demand for his products, he concluded a sales agreement with a well-
known houseware retailer in South Africa. In terms of the agreement, the
retailer will purchase R25 000 worth of products from Mr Xhumalo on
15 February 2025 on credit. The goods must be manufactured and
delivered by 15 March 2025, with payment scheduled for 31 March
2025. The agreement clearly states that Mr Xhumalo will only become
entitled to payment once he has delivered the goods.
Mr Xhumalo’s accountant is uncertain in which year of assessment the
R25 000 must be declared for tax purposes and contacted you for advice.
REQUIRED
MARKS
Discuss whether the R25 000 of the sale will constitute gross income in
the hands of Mr Xhumalo for the 2025 year of assessment.
Note:
• You can support the main issue in the question with relevant case law
from the module’s prescribed case law.
1. Introduction
Mr Xhumalo, a street vendor based in Gqeberha, South
Africa, has entered into a credit sales agreement with a
well-known houseware retailer. According to the
agreement, the retailer will purchase goods valued at
R25 000, with delivery due on 15 March 2025 and
payment due on 31 March 2025. However, the
Semester 1 2025 - DUE 7 April 2025
Mr Xhumalo lives in Gqeberha, South Africa. He manufactures and sells
various grass baskets and placemats from a street stall. Due to the high
demand for his products, he concluded a sales agreement with a well-
known houseware retailer in South Africa. In terms of the agreement, the
retailer will purchase R25 000 worth of products from Mr Xhumalo on
15 February 2025 on credit. The goods must be manufactured and
delivered by 15 March 2025, with payment scheduled for 31 March
2025. The agreement clearly states that Mr Xhumalo will only become
entitled to payment once he has delivered the goods.
Mr Xhumalo’s accountant is uncertain in which year of assessment the
R25 000 must be declared for tax purposes and contacted you for advice.
REQUIRED
MARKS
Discuss whether the R25 000 of the sale will constitute gross income in
the hands of Mr Xhumalo for the 2025 year of assessment.
Note:
• You can support the main issue in the question with relevant case law
from the module’s prescribed case law.
1. Introduction
Mr Xhumalo, a street vendor based in Gqeberha, South
Africa, has entered into a credit sales agreement with a
well-known houseware retailer. According to the
agreement, the retailer will purchase goods valued at
R25 000, with delivery due on 15 March 2025 and
payment due on 31 March 2025. However, the
