Gross Income

Question 1

The definition of Gross Income is made up 2 parts - what are they?

Answer 1

1. The preamble

2. Specific inclusions

Question 2

What is the basic principle of “received by or accrued to”?

Answer 2

Any amount is included at the earlier of receipt or accrual

Question 3

What is the basic principle of “the total amount”?

Answer 3

There must be an amount (value) received or accrued

Question 4

The source of income or the ‘territoriality principle’ is…

Answer 4

…where income has its origins!

Question 5

The value of an accrual in each case:

1. Asset or object
2. Money or right

Answer 5

1. The market value of the asset received

2. The face value of the debt (without discounting it!)

Question 6

A resident is either…

Answer 6

1. Ordinarily resident

2. Non-resident but qualifies under the “days test”

Question 7

The days test is met if:

Answer 7

The person has spent 91 days in the current and previous 5 years & 915 days in the previous 5 years in the republic

Question 8

A ‘person’ for tax purposes includes:

Answer 8

1. Legal and natural persons
2. Trusts
3. Deceased estates
4. Insolvent estates

Question 9

The gross income definition has 2 provisos:

Answer 9

1. Accruals arise when the taxpayer becomes entitled to them

2. The value of any accrual is its face value

Question 10

The residence of a legal person (company!) is determined by:

Answer 10

1. Where it was incorporated, established or formed

2. It’s place of effective management (day to day operations)

Question 11

The gross income definition for a resident is: In relation to any year or period of assessment:

Answer 11

The total amount
In cash or otherwise
Received by, accrued to or in favor of such resident
During such year, excluding receipts of a capital nature

Question 12

The definition of gross income for a non-resident is: in relation to any year period of assessment:

Answer 12

The total amount
In cash or otherwise
Received by, accrued to or in favor of such person
From a source within or deemed to be within the republic
During such year excluding receipts of a capital nature

Question 13

9 factors considered in whether an item is capital or not include:

Answer 13

1. The taxpayer’s ipse Dixie
2. The length of time the asset was held
3. The frequency with which the asset was traded
4. The nature of the taxpayer’s business
5. The taxpayer’s income stream
6. The reason for the sale of the asset
7. How the asset was financed
8. The nature of the asset
9. The continuity of activities

Question 14

11 factors to be considered in deciding if a person is ordinarily resident include:

Answer 14

1. Their most fixed and settled residence
2. Their habitual abode
3. Their business and personal interests
4. Their status in that country
5. The location of their personal belongings
6. Their nationality
7. Their family and social relations
8. Their political, cultural and other activities
9. Any applications for permanent residence
10. The period abroad and the purpose of their visit
11. The frequency and reasons for trips abroad