Statutory Inclusions in Gross Income - Services Rendered Flashcards
Stander v CIR
Summary
Stander was an employee of a franchise holder of Delta Motor Corporation. Stander received an award from Delta in the form of an overseas trip due to the excellent manor in which he performed his services to his employer, the franchise holder. He was considered to be one of the top Bookkeepers/Accountants of the franchise holders in SA.
Outcome
The amount received was not in respect of services rendered. Stander rendered no services to Delta. The amount was more in the nature of a testimonial or accolade.
Important Principles
There must be a causal relationship between the amount received and the services rendered. It is not enough that the rendering of services is one of the reasons a taxpayer receives an award; it must be a direct or main cause (causa causans)
CIR v Cowley
Summary
Cowley received an amount from his employer which was stated to be a ‘relocation payment’. The amount was given upon Cowley agreeing to enter the services of his new employer, with no obligations attached in terms of the length of the employment.
Outcome
The amount was given in respect of services rendered. He received the amount upon agreeing to provide services to his new employer and it does not matter that no specific term was agreed upon.
Principles
An amount received in respect entering the employment of an employer is paid as consideration for the rendering of future services and falls within the definition as being an amount ‘in respect of services rendered or to be rendered’.
De Villiers v CIR
Summary
De Villiers was paid out for accumulated leave which accrued to him during his time as Attorney General of the Transvaal Province.
Outcome
The amount accrued to him in respect of services rendered. It was paid out to him as a result of leave accumulated during his time in which he held his office and it was as a result of services rendered in relation to the holding of this office that entitled him to the leave in question.
Principles.
There must be a causal relationship between the payment and the rendering of services. Where there are dual considerations in play, we must look and give effect to the dominant one. It makes no difference whether the payment is a gratuity, in respect of a moral obligation or a contractual right.
CIR v Kotze
Summary
The taxpayer provided information to the police which lead to the arrest of criminals involved in diamond smuggling.
Outcome
The amount paid to Kotze was in respect of services rendered as it was paid for the information he provided to the police. It did not have the character of a testimonial or accolade.
Principles
Where there are two or more causes, the only legally relevant cause is the direct or proximate cause.
