Gross income - Receipt

Question 1

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.

Answer 1

Geldenhuys

Issue:
Are the proceeds from the sale of the sheep received by the widow?

Principle:
The amount is included in GI by a TP only if it is received by him on his own behalf, for his own benefit.

Question 2

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.

Answer 2

MP Finance Group CC

Issue:
Is the money (deposit) actually received byh the company?

Principle:
A bilateral receipt (the other party willingly gives you the money) that is used for your own intention means it has been received by you. You intended to use it for your own benefit.

Question 3

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 GI.

Answer 3

Pyott Ltd

Issue:
Is the proceeds relating to the tin still received by the TP?

Principle:
A deposit is received and thus treated as a receipt unless kept separately in a trust account, for the benefit of the customer.