Unit 3 - 3 Flashcards
Income and Capital
What is specifically excluded from Gross Income?
Capital amounts
What happens to the onus to prove things in tax law?
It shifts between SARS and the TP
What does the definition of Gross Income exclude?
Capital
What is the definition of Capital in the ITA? (If no, which case)
There is no definition - refer to WJ Fourie Beleggings
Since court cases on capital v income are conflicting, how do courts distinguish? (3 types)
Section 102 of the TAA places onus on TP
It is a question of law, merits of each case
Previous cases
What aspects did the court describe in the Visser case? (5)
Income = What CAPITAL produces Income = fruit Capital = tree CAPACITY in which TP acts is crucial INTENTION is everything
What is the Income Tax Court?
Not a real court; rather a tribunal.
How does one determine intention? (5)
Investigate the results Ipse dixit Credibility Surrounding facts & circumstances Objective factors
What did the court decide in the George Forest Timber case?
Differentiate between FIXED and FLOATING capital
Ito ‘intention’, what does INCOME mean?
Asset held with purpose of reselling at profit
Ito ‘intention’, what does CAPITAL mean?
Asset held to produce income
Do subjective or objective factors count when considering intention? Or both?
Both
- Subjective = what the TP thought
- Objective = assess results of TP’s actions
Ito a Pty, which points relate to INTENTION? (3)
Artifical person, separate from shareholders
The intention of the Pty does not equal the shareholder’s intention
Effective control is considered (look at managing directors)
What did the court decide in Elandsheuwel Farming?
The intention of shareholders were ascribed to the whole company
Court was influenced by prior history of shareholders
This was a private company with the shareholders being the same as directors. Public co. should have different outcome.
What is required for something to qualify as income?
There must be a profit making purpose
