Summary Gross income - fully summarised notes

Learning area 2 – GROSS INCOME

RECAP:




Gross income:
In relation to any year or period of assessment, means –
a) In the case of any resident, the total amount, in cash or otherwise received or
accrued to or in favor of such resident; or
b) In the case of any person other than a resident, the total amount, in cash or
otherwise received or accrued to or in favor of such person within the Republic
 NB: during such year or period of assessment excluding receipts or accruals of a
capital nature
 Mention ALL components in a test

,LOOK AT SUMMARY OF COURT CASES:

Resident:

 - Cohen v CIR (1946 AD 174)

 - CIR v Kuttel (1992 (3) SA 242 (A))

The total amount in cash or otherwise:

 - Lategan v CIR (1926 CPD)

 - CIR v Butcher Bros (Pty) (Ltd) (1945 AD)

 - CSARS v Brummeria Renaissance (Pty) (Ltd) (2007 SCA)

Received by or accrued to a person:

 - Geldenhuys v CIR

 - MP Finance Group CC (in liquidation) v CSARS (2007 SCA)

 - Pyott Ltd v CIR (1947 AD)

 - Lategan v CIR (1926 CPD)

 - CIR v People’s Stores (Walvis Bay) Pty Ltd (1990 A)

 - Mooi v CIR (1972 AD)

 - CIR v Witwatersrand Association of Racing Clubs (1960 A)

 - Delagoa Bay Cigarette Co (1918 TPD).

 - MP Finance Group CC (2007 SCA)

 - ITC 24510

Excluding receipts and accruals of a capital nature:

 - CIR v Visser (1937 T)

 - CIR v Pick ‘n Pay Employee Share Purchase Trust (1992 A)

 - CIR v Richmond Estates (Pty) Ltd (1956 A)

 - CIR v George Forrest Timber Co Ltd (1924 A)

,  - CIR v Stott (1928 AD)

 - Natal Estates Ltd v CIR (1975 A)

 - CIR v Nussbaum (1996 A)

 - WJ Fourie Beleggings v Commissioner for South African Revenue Service (2009
SCA)

 - CIR v Nel (1997 T)

 - COT v Levy (1952 A)

 - Berea West Estates (Pty) Ltd v SIR

 - SARS v Founders Hill (Pty) Ltd (SCA)

 - John Bell v SIR

 - Elandsheuwel Farming (Edms) Bpk v SBI

 - Stellenbosch Farmers’ Winery Limited v C:SARS

Amount in cash or otherwise

o Not only the receipt or accrual of an amount should be included in a person’s gross
income – value of non-cash items must be included

o Lategan v CIR: ‘amount’ shouldn’t refer to just money, also the value of every form
of property earned by the taxpayer, whether corporeal or incorporeal which has
monetary value

o In the Lategan case  where a taxpayer acquired a right during a year of assessment
to receive instalments of an amount during subsequent years, the present value of
that right at the end of that year should be included in the taxpayers gross income

o However ; proviso was added: where a person becomes entitled to any amount
during a year of assessment, which is payable on a date falling after the last day of
such year, the amount is deemed to have accrued to the person during the year –
essentially – the face value of the amount is included in the persons gross income
and not the present value as what was decided in the Lategan case

o CIR v Butcher Bros  taxpayer leased a building to a tenant for 50 years, in the lease
agreement, tenant was expected to demolish the buildings to build a theatre which
would be worth more, upon termination of the lease, the buildings and
improvements would revert to the taxpayer without compensating the tenant for
the costs incurred relating to buildings and improvements. Court was asked to rule