Gross income

Question 0

Define gross income?

Answer 0

The total amount
In cash or otherwise
Received by or accrued to, in favor of,
A person from anywhere in case of a person who is a resident, or from a SA source in the case of a non-resident
Other than receipts of or accruals of a capital nature

Question 1

What do you need to confirm if an asset is revenue or capital?

Answer 1

Intention
Length of time held
Frequency
Nature of taxpayers business
Income stream
Reason for sale
Finance
Nature of assets

Question 2

Revenue vs capital on damages and compensation

Answer 2

If payment is compensation for loss of taxpayers capital asset (income producing machine) payment is of a capital nature
If payment is compensation for loss of profit, compensation is of a revenue nature

Question 3

Amounts not included in gross income?

Answer 3

Fortuitous gains
Gifts, inherited amounts, prizes, donations are of a capital nature
Gambling: unless the person is regular gambler or its part of his work
Goodwill
Grants and subsidies: grants are taxed as revenue if the grants subsidized revenue, capital if it was to subsidize an capital asset

Question 4

Cont expenses not included in gross income..

Answer 4

Illegal expenses: cannot claim a deduction on illegal expenses
Restraint of trade: capital in nature

Question 5

Gross income cont…

Answer 5

Interest and rental is fruits of a capital asset and is revenue in nature

Question 6

Chapter 3

Special inclusions meaning?

Answer 6

Deals with amounts which, even though they fall outside of the general of definition (either because their capital in nature or are from a non SA source)are specifically included in gross income