Assignment 2/2 2025 SOlutions
The Taxation of Business Activities
| TAX3701
Semester 2
Department of Taxation
ASSIGNMENT 2
QUESTION 1
Analysis Conclusion & Treatment
, The amount of R95,000 was received in cash by MP during the year of
assessment. According to the definition in s1 of the Income Tax Act, gross
The amount was received and is
income includes all amounts “received by" the taxpayer. The principle in CIR v
therefore included in gross income.
Pick 'n Pay Employee Share Trust confirms that a receipt occurs when an
amount is unconditionally made available to the taxpayer.
The payment was for a service (specialist knowledge or "know-how") rendered
in the ordinary course of MP's business. This service is directly linked to its core
The amount is revenue in nature and
revenue-generating activities of selling animal feed and providing
forms part of gross income.
supplementary advice. Therefore, the receipt is of a revenue nature, not a
capital receipt.
The source of the income is MP's trading operations located within South
The entire amount is from a taxable
Africa. There is no indication that any part of the amount is capital or exempt
source within the Republic.
under the Act.
The full R95,000 must be included in the
Final Conclusion: The R95,000 is a revenue receipt that accrued to MP from its
gross income of Moses Patel (Pty) Ltd for
trading operations. It meets all the criteria to be included in "gross income” as
the year of assessment ending 28
defined in s1 of the Income Tax Act.
February 2025.
QUESTION 2
PART A (20 marks)
Analysis & Motivation (VAT Principles
Transaction Output VAT (R) Input VAT (R)
and Calculations)
The Taxation of Business Activities
| TAX3701
Semester 2
Department of Taxation
ASSIGNMENT 2
QUESTION 1
Analysis Conclusion & Treatment
, The amount of R95,000 was received in cash by MP during the year of
assessment. According to the definition in s1 of the Income Tax Act, gross
The amount was received and is
income includes all amounts “received by" the taxpayer. The principle in CIR v
therefore included in gross income.
Pick 'n Pay Employee Share Trust confirms that a receipt occurs when an
amount is unconditionally made available to the taxpayer.
The payment was for a service (specialist knowledge or "know-how") rendered
in the ordinary course of MP's business. This service is directly linked to its core
The amount is revenue in nature and
revenue-generating activities of selling animal feed and providing
forms part of gross income.
supplementary advice. Therefore, the receipt is of a revenue nature, not a
capital receipt.
The source of the income is MP's trading operations located within South
The entire amount is from a taxable
Africa. There is no indication that any part of the amount is capital or exempt
source within the Republic.
under the Act.
The full R95,000 must be included in the
Final Conclusion: The R95,000 is a revenue receipt that accrued to MP from its
gross income of Moses Patel (Pty) Ltd for
trading operations. It meets all the criteria to be included in "gross income” as
the year of assessment ending 28
defined in s1 of the Income Tax Act.
February 2025.
QUESTION 2
PART A (20 marks)
Analysis & Motivation (VAT Principles
Transaction Output VAT (R) Input VAT (R)
and Calculations)
