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Special Inclusions - Coggle Diagram
Special Inclusions
Annuity
An annuity is not defined in the Act, but in a special court case, ITC 761 (1952), the court outlined what it considered to be the important characteristics of an annuity, which are:
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It is chargeable against some person, i.e. there is an obligation to pay. This means that voluntary payments, even if they are repetitive, do not constitute an annuity.
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Alimony and Maintenance
Alimony, allowance, or maintenance received by a taxpayer from their spouse or former spouse, and child maintenance payments are included in gross income.
Services Rendered
When a Voluntary Award is given the receipt is considered of a capital nature, and thus does not fall under the definition of gross income
Long service awards are not included in gross income to the extent that all the long service awards during the year do not exceed R5,000.
All amounts received for Services Rendered or employment, whether capital or revenue in nature are Incl in Gross Income
"In respect of" means the payment must be for services rendered or to be rendered, whether directly or indirectly, as a reward for those services.
Referring to past or future services, payment is taxed in the year received as income.
Restraint of Trade
Restraint of trade receipts not related to employment or holding of any office, such as those imposed after selling a business, are not included in gross income.
Restraint of trade payment is not considered as payment for services rendered, but a payment for an undertaking not to render services in competition with the payer.
Paragraph (cA) includes restraint of trade amounts received by labor brokers without an exemption certificate, and entities such as personal service companies, personal service trusts, or personal service providers.
Paragraph (cB) includes restraint of trade receipts in the gross income of natural persons if the restraint is imposed in relation to employment, holding of office (e.g. director), or any past or future employment or office holding.
Lump Sum Benefits
Lump sum benefits accruing to an employee or director from an employer are included in gross income in terms of paragraph
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only applies to employees and holders of office, and not to persons who are neither employees nor holders of office.
Lump sum benefits for retrenchment, age 55 or older, or permanent inability to work due to health issues are called "severance benefits" and taxed differently
Pension, Provident and Retirement Annuity fund benefits
There are two types of retirement fund lump sum benefits: retirement fund lump sum benefit and retirement fund lump sum withdrawal benefit.
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The Second Schedule provides for deductions from the lump sum, with the remaining balance being included in gross income.