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5 elements of gross income and COURT CASES, BRUMMERIA RENAISSANCE - Coggle…
5 elements of gross income and COURT CASES
1)Natural person
KUTTEL
PRINCIPLE: A person is an ordinary resident where there persons principle residence is "where the person is habitually and normally resident".
FACTS: A taxpayer moved to America and began his life there. He visited South Africa on a regular basis to pursue business interests and participate in sailing activities. During these times, he lived at his home in Cape Town, where he kept it up to date and renovated it
COHEN
PRINCIPLE: A person is ordinarily resident in a country where he or she intend to return from all their wanderings. A country she or he regards as real home.
FACTS: A taxpayer owned a flat in Johannesburg and decided to move overseas for work for two years and leased his flat.
3) Received by or accrued to a
taxpayer
RECEIVED BY:
GELDENHYS V CIR
PRINIPLE: An amount is received by a taxpayer only if it is received by him on his own benefits.
FACTS: A widow inherited the right of use of a farm (usufruct) while her children received the right of ownership (bare dominium). She later decided to give up farming and sold the sheep on the property with her children’s consent.
MP FINANCE
PRINCIPLE: A bilateral receipt that is used for your own intention means t has been received by you. You intended to use it for your own benefit.
FACTS: A company had an illegal pyramid scheme where they promised investors fantastic returns with no intention of doing just that. They classified the money received as
deposits (loans) and used it for their own purposes.
CIR V WITWATERSRAND
ASSOCIATION OF RACING CLUBS
PRINCIPLE: Once income has accrued, subsequent disposal thereof is irrelevant
FACTS: A race event was held and resulted in proceeds that the taxpayer divided between two charities. The taxpayer argued that the proceeds did not accrue to them, but to the charities.
DELAGOA BAY CIGARETTES
PRINCIPLES: The legality(illegal) of receipt does not preclude it from tax
FACTS: The company ran an illegal lottery. It set aside a certain portion of its income from the sales of cigarettes in order to pay prizes to people who held winning numbers, obtained from coupons in the cigarette packets.
PYOTT LTD V CIR
PRINCIPLE: Deposits are revenue in nature, arising in the ordinary course of trade.
FACTS: A biscuit manufacturer sold tinned biscuits.The customers could return the tins and receive money for the tin. The company treated the proceeds relating to the tin as a deposit and not gross income.
ACCRUED TO:
CIR V PEOPLE'S STORES (WALVIS
BAY(PTY) LTD
PRINCIPLE: Accrued means entitled to Provision added to Gross Income: The accrual is the face value, not a discounted value.
FACTS: A clothing retailer sold on credit.
MOOI V CIR
PRINCIPLE: Accrual’ means unconditionally
entitled to. An amount has not accrued to a TP if it is dependant on a future event
LATEGAN V CIR
FACTS: The taxpayer, a wine farmer, entered into an agreement in terms of which he
disposed of wine he had made during the
year of assessment. A portion of the selling price was paid prior
to the end of his year of assessment and the balance was to be paid
in instalments
after the end of the year of
assessment.
PRINCIPLE: The term amount must be given a wider meaning and must not only include money, but also the value of every property earned by taxpayer whether corporeal or incorporeal, which has a money VALUE.
4) YEAR OF ASSESSMENT
PERSON OTHER THAN A COMPANY
1 MARCH TO 29/30 FEBRUARY
Company including CC
Financial yera
2) Total amount in cash/ otherwise.
LATEGAN V CIR
PRINCIPLE: The term amount must be given a wider meaning and must not only include money, but also the value of every property earned by taxpayer whether corporeal or incorporeal, which has a money value.
FACTS: The taxpayer, a wine agreement in terms of which he disposed of wine he had made during the year of assessment. A portion of the selling price was paid prior to the end of his year of assessment and the balance was to be paid in instalments after the end of the year of assessment.
CIR V BUTCHER BROTHERS
FACTS: The taxpayer owned land, leased it to a company for 50 years with a renewal option of 49 years. In terms of the lease agreement the lessee was obliged to effect improvements. The ownership of the improvements would pass to the lessor upon termination or renewal.
PRINCIPLE: The onus is on SARS to determine the amount. The word "amount" refers to an amount with a determined value.
PRINCIPLE: An amount does not have to be able to be turned into money by taxpayer to be an amount for the purpose of gross income definition. The amount merely had to be in the form of an assets which could be turned into money if it was sold.
FACTS: The taxpayer companies developed retirement villages and sold life rights in the dwelling units
BRUMMERIA RENAISSANCE