TAX2601
Assignment 1 Semester 1 2025
Detailed Solutions, References & Explanations
Unique number:
Due Date: 7 April 2025
QUESTION 1
Gross Income Application to Mr Xhumalo's Case
Requirement
Resident/Non Mr Xhumalo lives in Gqeberha, South Africa, which makes him a resident.
resident Therefore, the worldwide income principle applies (s 1, Income Tax Act).
Total amount The amount is R25 000. This is a quantifiable and definite amount agreed
upon in the sales contract. In CIR v Butcher Bros (Pty) Ltd, it was held
that an amount received in a form other than cash must have an
ascertainable monetary value
In cash or The amount is to be received in cash via a credit transaction. Even
otherwise though it is on credit, it has an ascertainable value.
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply .. with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
, +27 67 171 1739
QUESTION 1
Gross Income Application to Mr Xhumalo's Case
Requirement
Resident/Non Mr Xhumalo lives in Gqeberha, South Africa, which makes
resident him a resident. Therefore, the worldwide income principle
applies (s 1, Income Tax Act).
Total amount The amount is R25 000. This is a quantifiable and definite
amount agreed upon in the sales contract. In CIR v Butcher
Bros (Pty) Ltd, it was held that an amount received in a form
other than cash must have an ascertainable monetary value
In cash or The amount is to be received in cash via a credit transaction.
otherwise Even though it is on credit, it has an ascertainable value.
Received by, According to the agreement, Mr Xhumalo will only become
accrued to, or in entitled to the money after delivery. As of 15 February 2025,
favour of the he has not yet delivered the goods, so no accrual has taken
taxpayer place. In CIR v People’s Stores (Walvis Bay) (Pty) Ltd 52
SATC 9, it was established that income accrues when a
taxpayer becomes unconditionally entitled to it, which is not
the case here. Therefore, the amount has not accrued in the
2025 year of assessment.
During the year of Mr Xhumalo's year of assessment ends on 28 February
assessment 2025. Since delivery is only due on 15 March 2025, which
falls in the next tax year, the income does not fall into the
2025 tax year.
Excluding amounts This amount is from the sale of trading stock (grass baskets
of a capital nature and placemats), which forms part of Mr Xhumalo’s normal
business operations, and is therefore revenue in nature.
Refer to CIR v Visser, which distinguished capital assets
(tree) from revenue (fruit).
Conclusion The R25 000 does not form part of gross income for the 2025
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is"
without any express or implied representations or warranties. The author accepts no responsibility or
liability for any actions taken based on the information contained within this document. This document is
intended solely for comparison, research, and reference purposes. Reproduction, resale, or transmission
of any part of this document, in any form or by any means, is strictly prohibited.
Assignment 1 Semester 1 2025
Detailed Solutions, References & Explanations
Unique number:
Due Date: 7 April 2025
QUESTION 1
Gross Income Application to Mr Xhumalo's Case
Requirement
Resident/Non Mr Xhumalo lives in Gqeberha, South Africa, which makes him a resident.
resident Therefore, the worldwide income principle applies (s 1, Income Tax Act).
Total amount The amount is R25 000. This is a quantifiable and definite amount agreed
upon in the sales contract. In CIR v Butcher Bros (Pty) Ltd, it was held
that an amount received in a form other than cash must have an
ascertainable monetary value
In cash or The amount is to be received in cash via a credit transaction. Even
otherwise though it is on credit, it has an ascertainable value.
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply .. with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
, +27 67 171 1739
QUESTION 1
Gross Income Application to Mr Xhumalo's Case
Requirement
Resident/Non Mr Xhumalo lives in Gqeberha, South Africa, which makes
resident him a resident. Therefore, the worldwide income principle
applies (s 1, Income Tax Act).
Total amount The amount is R25 000. This is a quantifiable and definite
amount agreed upon in the sales contract. In CIR v Butcher
Bros (Pty) Ltd, it was held that an amount received in a form
other than cash must have an ascertainable monetary value
In cash or The amount is to be received in cash via a credit transaction.
otherwise Even though it is on credit, it has an ascertainable value.
Received by, According to the agreement, Mr Xhumalo will only become
accrued to, or in entitled to the money after delivery. As of 15 February 2025,
favour of the he has not yet delivered the goods, so no accrual has taken
taxpayer place. In CIR v People’s Stores (Walvis Bay) (Pty) Ltd 52
SATC 9, it was established that income accrues when a
taxpayer becomes unconditionally entitled to it, which is not
the case here. Therefore, the amount has not accrued in the
2025 year of assessment.
During the year of Mr Xhumalo's year of assessment ends on 28 February
assessment 2025. Since delivery is only due on 15 March 2025, which
falls in the next tax year, the income does not fall into the
2025 tax year.
Excluding amounts This amount is from the sale of trading stock (grass baskets
of a capital nature and placemats), which forms part of Mr Xhumalo’s normal
business operations, and is therefore revenue in nature.
Refer to CIR v Visser, which distinguished capital assets
(tree) from revenue (fruit).
Conclusion The R25 000 does not form part of gross income for the 2025
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is"
without any express or implied representations or warranties. The author accepts no responsibility or
liability for any actions taken based on the information contained within this document. This document is
intended solely for comparison, research, and reference purposes. Reproduction, resale, or transmission
of any part of this document, in any form or by any means, is strictly prohibited.
