[Company name]
TAX2601 Assignment 3
Semester 2 2024 - DUE 2
September 2024
QUESTIONS WITH DETAILED 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 R45,000 maintenance service fee constitutes gross income
for Easy Elevators (Pty) Ltd ("EE") for the year of assessment ending 31 March 2024, it
is essential to analyze the situation using the definition of "gross income" as per the
Income Tax Act 58 of 1962 and relevant case law.
Gross Income Definition
Section 1 of the Income Tax Act defines "gross income" as follows:
TAX2601 Assignment 3
Semester 2 2024 - DUE 2
September 2024
QUESTIONS WITH DETAILED 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 R45,000 maintenance service fee constitutes gross income
for Easy Elevators (Pty) Ltd ("EE") for the year of assessment ending 31 March 2024, it
is essential to analyze the situation using the definition of "gross income" as per the
Income Tax Act 58 of 1962 and relevant case law.
Gross Income Definition
Section 1 of the Income Tax Act defines "gross income" as follows:
