Important court decisions – ITC 2019
Please note: Marks will only be awarded for principles from these cases when
relevant to a discussion. No marks will be awarded for the case names.
Relevant to Word/phrase Name of court case and principle
Def: gross Resident Cohen v CIR:
income “ordinary residence” would be the country to which a person would
naturally and as a matter of course return from his wanderings.
CIR v Kuttel:
“ordinary residence” = place where you normally reside, apart from
temporary/occasional absences.
Def: gross Amount CIR v Lategan:
income Not only money, but also the value of every form of property
earned by the TP, which has a money value, whether corporeal or
incorporeal.
CIR v Butcher Bros (Pty) Ltd:
The onus of establishing an amount rests upon the Commissioner.
CSARS v Brummeria:
Interest-free loans granted to a TP in consideration for the
acquisition of life-interest in units does constitute a benefit of which
a value can be determined to be included as part of gross income.
(A benefit with an ascertainable value is included in gross income)
Def: gross From a source CIR v Lever Brothers and Unilever:
income within RSA – What is the originating cause of the income? OR Where is the
true source originating cause located?
Def: gross Accrued to CIR v People’s Stores (Walvis Bay) (Pty) Ltd:
income “Accrued to” implies that the TP should be entitled to an amount.
The physical receipt thereof in the yoa as well as the enforceability
thereof, is irrelevant. E.g. Instalment payable after year end has
accrued, although not due and payable.
CIR v Witwatersrand Association of Racing Clubs:
The disposal of income after it has accrued to a TP does not
influence the taxability of that accrual in the hands of the TP.
Mooi v SIR:
The “accrual” should be unconditional. Only after all conditions
have been fulfilled, accrual can take place.
, Def: gross Received by Geldenhuys v CIR:
income “Received by” means “on behalf” and “for his own benefit”.
Pyott Ltd v CIR:
Deposits received by a TP and applied for his own benefit should
be included in his gross income.
MP Finance Group CC v CSARS:
An amount will be “received by” a TP if his intention was to benefit
from it for his own purpose.
Def: gross Of a capital CIR v Richmond Estates (Pty) Ltd:
income nature-intention TP can change his intention. The mere fact that TP sells his capital
asset cannot result in profit being of an income nature.
COT Southern Rhodesia v Levy:
If the TP has mixed intentions, effect will be given to his
main/dominant intention.
Elandsheuwel Farming (Pty) Ltd v CIR
There should be a distinction between the intention of the
shareholders (and their previous history) and the intention of the
directors of the company.
Def: gross Of a capital CIR v Pick ‘n Pay Employee share purchase trust:
income nature-scheme Where the taxpayer participated in a scheme of profit‐making the
of profit making proceeds are revenue of nature and taxable as gross income.
Def: gross Of a capital CIR v Stott:
income nature- The right of a TP to realise his asset to his best advantage does
mixed/dual not necessarily changes the nature from capital to income.
intention
CIR v Nel:
Asset acquired with the intention to own it as an investment will
remain capital in nature where the disposal of it occurs to
unusual/special circumstances.
Def: gross Of a capital CIR v Nussbaum:
income nature- change If a TP has an original intention which is capital in nature and a
in intention secondary intention which is revenue in nature and the two
purposes are pursued simultaneously, then the secondary intention
would result in profits being treated as revenue in nature.
Natal Estates Ltd v SIR:
A change in intention implies something more than the mere
decision to sell an asset of capital nature. Consider all the facts
Please note: Marks will only be awarded for principles from these cases when
relevant to a discussion. No marks will be awarded for the case names.
Relevant to Word/phrase Name of court case and principle
Def: gross Resident Cohen v CIR:
income “ordinary residence” would be the country to which a person would
naturally and as a matter of course return from his wanderings.
CIR v Kuttel:
“ordinary residence” = place where you normally reside, apart from
temporary/occasional absences.
Def: gross Amount CIR v Lategan:
income Not only money, but also the value of every form of property
earned by the TP, which has a money value, whether corporeal or
incorporeal.
CIR v Butcher Bros (Pty) Ltd:
The onus of establishing an amount rests upon the Commissioner.
CSARS v Brummeria:
Interest-free loans granted to a TP in consideration for the
acquisition of life-interest in units does constitute a benefit of which
a value can be determined to be included as part of gross income.
(A benefit with an ascertainable value is included in gross income)
Def: gross From a source CIR v Lever Brothers and Unilever:
income within RSA – What is the originating cause of the income? OR Where is the
true source originating cause located?
Def: gross Accrued to CIR v People’s Stores (Walvis Bay) (Pty) Ltd:
income “Accrued to” implies that the TP should be entitled to an amount.
The physical receipt thereof in the yoa as well as the enforceability
thereof, is irrelevant. E.g. Instalment payable after year end has
accrued, although not due and payable.
CIR v Witwatersrand Association of Racing Clubs:
The disposal of income after it has accrued to a TP does not
influence the taxability of that accrual in the hands of the TP.
Mooi v SIR:
The “accrual” should be unconditional. Only after all conditions
have been fulfilled, accrual can take place.
, Def: gross Received by Geldenhuys v CIR:
income “Received by” means “on behalf” and “for his own benefit”.
Pyott Ltd v CIR:
Deposits received by a TP and applied for his own benefit should
be included in his gross income.
MP Finance Group CC v CSARS:
An amount will be “received by” a TP if his intention was to benefit
from it for his own purpose.
Def: gross Of a capital CIR v Richmond Estates (Pty) Ltd:
income nature-intention TP can change his intention. The mere fact that TP sells his capital
asset cannot result in profit being of an income nature.
COT Southern Rhodesia v Levy:
If the TP has mixed intentions, effect will be given to his
main/dominant intention.
Elandsheuwel Farming (Pty) Ltd v CIR
There should be a distinction between the intention of the
shareholders (and their previous history) and the intention of the
directors of the company.
Def: gross Of a capital CIR v Pick ‘n Pay Employee share purchase trust:
income nature-scheme Where the taxpayer participated in a scheme of profit‐making the
of profit making proceeds are revenue of nature and taxable as gross income.
Def: gross Of a capital CIR v Stott:
income nature- The right of a TP to realise his asset to his best advantage does
mixed/dual not necessarily changes the nature from capital to income.
intention
CIR v Nel:
Asset acquired with the intention to own it as an investment will
remain capital in nature where the disposal of it occurs to
unusual/special circumstances.
Def: gross Of a capital CIR v Nussbaum:
income nature- change If a TP has an original intention which is capital in nature and a
in intention secondary intention which is revenue in nature and the two
purposes are pursued simultaneously, then the secondary intention
would result in profits being treated as revenue in nature.
Natal Estates Ltd v SIR:
A change in intention implies something more than the mere
decision to sell an asset of capital nature. Consider all the facts
