LML4804
October November Portfolio Semester 2 2025
Unique number:
Due Date: 14 October 2025
QUESTION 1
1.1.
In terms of South African income tax law, the gross income of a taxpayer must be included
in the year of assessment in which it is received by or accrued to the taxpayer, whichever
occurs first.1 Lentumetse’s Pub, being a business, is taxed on the accrual basis and not on
the cash basis. This means that income is included in gross income at the earlier of the date
of receipt or the date on which the amount accrues to the taxpayer.1
According to section 1 of the Income Tax Act 58 of 1962, income is regarded as having
accrued to a person when they have become entitled to it, even if it has not yet been paid.1
Lentumetse’s Pub earned a profit of R420 000 on 23 January 2024 from its normal trading
activities. The business was already operational by April 2023, and therefore the income
earned in January 2024 forms part of the 2024 year of assessment, which runs from 1
March 2023 to 29 February 2024.
Terms000
The transaction with Date & Wedd Event Organisers occurred when liquor worth R400 of use
By making use of this document you agree to:
was supplied on 15 December 2024. At this date, the income had accrued, because
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
1.1.
In terms of South African income tax law, the gross income of a taxpayer must be included
in the year of assessment in which it is received by or accrued to the taxpayer, whichever
occurs first.1 Lentumetse’s Pub, being a business, is taxed on the accrual basis and not on
the cash basis. This means that income is included in gross income at the earlier of the
date of receipt or the date on which the amount accrues to the taxpayer.2
According to section 1 of the Income Tax Act 58 of 1962, income is regarded as having
accrued to a person when they have become entitled to it, even if it has not yet been
paid.3 Lentumetse’s Pub earned a profit of R420 000 on 23 January 2024 from its normal
trading activities. The business was already operational by April 2023, and therefore the
income earned in January 2024 forms part of the 2024 year of assessment, which runs
from 1 March 2023 to 29 February 2024.
The transaction with Date & Wedd Event Organisers occurred when liquor worth R400
000 was supplied on 15 December 2024. At this date, the income had accrued, because
Lentumetse’s Pub became legally entitled to the payment when the liquor was delivered.4
The fact that Date & Wedd only paid R250 000 in February 2025 does not affect the timing
of accrual. Therefore, the full amount of R400 000 is included in gross income in the 2025
year of assessment, which runs from 1 March 2024 to 28 February 2025.
The balance of R150 000, paid on 29 April 2025, arose after the dispute was resolved.
Because the amount was initially disputed, Lentumetse did not have a right to it at the time
of supply in December 2024. It therefore did not accrue until the dispute was finalised and
the entitlement to the money became unconditional. The R150 000 will thus fall into the
2026 year of assessment (1 March 2025 to 28 February 2026).
Accordingly, the income received in January 2024, February 2025, and April 2025 will be
included in the 2024, 2025, and 2026 years of assessment respectively.
1
M. Stiglingh, A.S. Koekemoer, L. van Heerden, J.S. Wilcocks, R.D. De Swardt & P. van der Zwan, Silke: South
African Income Tax (2022), p. 43.
2
Ibid., p. 45.
3
Ibid., p. 46.
4
Ibid., p. 47. 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.
October November Portfolio Semester 2 2025
Unique number:
Due Date: 14 October 2025
QUESTION 1
1.1.
In terms of South African income tax law, the gross income of a taxpayer must be included
in the year of assessment in which it is received by or accrued to the taxpayer, whichever
occurs first.1 Lentumetse’s Pub, being a business, is taxed on the accrual basis and not on
the cash basis. This means that income is included in gross income at the earlier of the date
of receipt or the date on which the amount accrues to the taxpayer.1
According to section 1 of the Income Tax Act 58 of 1962, income is regarded as having
accrued to a person when they have become entitled to it, even if it has not yet been paid.1
Lentumetse’s Pub earned a profit of R420 000 on 23 January 2024 from its normal trading
activities. The business was already operational by April 2023, and therefore the income
earned in January 2024 forms part of the 2024 year of assessment, which runs from 1
March 2023 to 29 February 2024.
Terms000
The transaction with Date & Wedd Event Organisers occurred when liquor worth R400 of use
By making use of this document you agree to:
was supplied on 15 December 2024. At this date, the income had accrued, because
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
1.1.
In terms of South African income tax law, the gross income of a taxpayer must be included
in the year of assessment in which it is received by or accrued to the taxpayer, whichever
occurs first.1 Lentumetse’s Pub, being a business, is taxed on the accrual basis and not on
the cash basis. This means that income is included in gross income at the earlier of the
date of receipt or the date on which the amount accrues to the taxpayer.2
According to section 1 of the Income Tax Act 58 of 1962, income is regarded as having
accrued to a person when they have become entitled to it, even if it has not yet been
paid.3 Lentumetse’s Pub earned a profit of R420 000 on 23 January 2024 from its normal
trading activities. The business was already operational by April 2023, and therefore the
income earned in January 2024 forms part of the 2024 year of assessment, which runs
from 1 March 2023 to 29 February 2024.
The transaction with Date & Wedd Event Organisers occurred when liquor worth R400
000 was supplied on 15 December 2024. At this date, the income had accrued, because
Lentumetse’s Pub became legally entitled to the payment when the liquor was delivered.4
The fact that Date & Wedd only paid R250 000 in February 2025 does not affect the timing
of accrual. Therefore, the full amount of R400 000 is included in gross income in the 2025
year of assessment, which runs from 1 March 2024 to 28 February 2025.
The balance of R150 000, paid on 29 April 2025, arose after the dispute was resolved.
Because the amount was initially disputed, Lentumetse did not have a right to it at the time
of supply in December 2024. It therefore did not accrue until the dispute was finalised and
the entitlement to the money became unconditional. The R150 000 will thus fall into the
2026 year of assessment (1 March 2025 to 28 February 2026).
Accordingly, the income received in January 2024, February 2025, and April 2025 will be
included in the 2024, 2025, and 2026 years of assessment respectively.
1
M. Stiglingh, A.S. Koekemoer, L. van Heerden, J.S. Wilcocks, R.D. De Swardt & P. van der Zwan, Silke: South
African Income Tax (2022), p. 43.
2
Ibid., p. 45.
3
Ibid., p. 46.
4
Ibid., p. 47. 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.
