, TAX3701 Assignment 2
Semester 2 2025
DUE 18 September 2025
Use this document as a guide and for references to answer your assignment
QUESTION 1 (10 marks, 18 minutes)
Discuss, whether the amount of R95 000 received by Moses Patel (Pty) Ltd will be
regarded as gross income as defined in the Income Tax Act for the 2025 year of
assessment, supported with relevant legislation and case law principles.
Definition of Gross Income
Section 1 of the Income Tax Act 58 of 1962 defines gross income as:
“… the total amount, in cash or otherwise, received by or accrued to or in
favour of a taxpayer during a year of assessment, excluding receipts of a capital
nature.”
Key points:
Cash received or accrued is generally included.
Exclude capital receipts.
Step 2: Nature of the receipt
MP received R95,000 in cash for:
Services rendered by a newly appointed animal feeding supplement
specialist.
The services relate to providing commercial know-how to farmers, i.e.,
advising on cost-effective feeding improvements.
This is not the sale of goods but a rendering of a service.
Relevant case law:
1. CIR v Stott 1949 (3) SA 115 (A):
Semester 2 2025
DUE 18 September 2025
Use this document as a guide and for references to answer your assignment
QUESTION 1 (10 marks, 18 minutes)
Discuss, whether the amount of R95 000 received by Moses Patel (Pty) Ltd will be
regarded as gross income as defined in the Income Tax Act for the 2025 year of
assessment, supported with relevant legislation and case law principles.
Definition of Gross Income
Section 1 of the Income Tax Act 58 of 1962 defines gross income as:
“… the total amount, in cash or otherwise, received by or accrued to or in
favour of a taxpayer during a year of assessment, excluding receipts of a capital
nature.”
Key points:
Cash received or accrued is generally included.
Exclude capital receipts.
Step 2: Nature of the receipt
MP received R95,000 in cash for:
Services rendered by a newly appointed animal feeding supplement
specialist.
The services relate to providing commercial know-how to farmers, i.e.,
advising on cost-effective feeding improvements.
This is not the sale of goods but a rendering of a service.
Relevant case law:
1. CIR v Stott 1949 (3) SA 115 (A):
