tax 2601 assignment 5 semester 2

QUESTION 1



Rental Sales from tenants


Rental sales from tenants qualify as gross income because they satisfy all of the
elements of the gross income definition, namely, the total amount received by,
accrued to, or is in favor of the resident in cash or otherwise during the assessment
year, and it is not of a capital nature. As a result, rental income should be included in
gross income.


Amount received from XP(pty) Ltd
Even though Investprops (Pty) Ltd received the money from XP(pty)Ltd, they did not
benefit from it because they will need to pay it back. The money was mistakenly
deposited into the account.


Dividends Received
As the R700 000 was received within the current assessment year and is not of a
capital type, it will be considered gross income by Investprops. Dividend income,
which is exempt from income tax and does not, therefore, constitute taxable income,
it should be mentioned.


Leasehold improvements
The leasehold improvements incurred by the tenant, while accruing to Investprops,
do not constitute gross income because they are capital expenditure. The definition
of gross income expressly excludes capital receipts.