chapter 4: specific inclusions

general definition of gross income excludes amounts of capital nature of a capital nature.

Par(a)-(n) includes amounts in gross income even if of capital nature

first check if amounts fall under specific inclusions par(a)-(n) if not then apply general definitionof gross income

annuities-par(a)

characteristics: an annual payment

repetitively payable for a certain period

contractually chargeable against same person

are capital in nature but specifically included

Maintenance payents- Par(b)

included in GI of receipient if:

paid by spouse or ex-spouse

under a judical order, written seperation agreement or divorce order

by way of alimony, allowance or maintenance of taxpayer or

in terms of maintenance order under S7(4)

Par(c )- services rendered

included in GI when services are rendered or to be rendered or employment or holding of an office- must be a casual link to services and money received

proviso- does not apply to fringe benefits

taxable in year amount is received or accrued regardless to which period it relates

accumulated leave payments are included as it accrues because of services rendered

restraint of trade- par(cA)-(cB)

the right to trade freely is a capital asset- so payment to restrict this is capital in nature

cA- restraint of trade payment

cB- payment for past, present or future employment

compensation for termination of services-par(d)

i- lump sum payments received for change in payments

ii- proceeds of insurance policy

iii- a policy of insurance ceded to an employee

severance benefit- special treatment column 3- Par(d)(i)

lump sum for change in employment is a SB if employee is 55 y/o, permanently incapable due to injury etc., employer ceded to carry on trade or employee becomes redundant- exception employee held 5% of shares

commutation of amounts due- par(f)

substitution of one amount due under a contract for another type

lease premium- par(g)

amount paid for the use or right of use of certain assets that is distinct from rent and has ascertainable value

Compensation for imparting knowledge and information- par(gA)

includes amounts for imparting(disclosing or communicating) knowledge or information; or rendering assistance or services of knowledge or information

sales of copyrighted written material is not imparting information unless written material is part of a training course

leasehold improvements - par(h)

value of improvements effected by the lessee on the lessors land or buildings, in terms of a contract, is included in lessors GI

amount specified- signed= accrued

not specified- completed= received

dividends- par(k)

Both local and foreign dividends are included in terms of Par(k)

key man insurance policy proceeds- par(m)

An employer takes out a policy on a key employee to hedge against the risk of lossess due to that employees death, disability or illness

amounts received to the policy holder in respect of a key-man insurance policy are included oiin gross income

amounts deemed to be receipts or accruals-par(n)

acts as a catch it all includes in gross income any amounts that are specifically included by ‘income’ by other provisions of the act

S8(4) recoupments

when a depreciable asset is sold for more than its tax value

S8C-

vesting of equity instruments

comprehensive frameworks

column 1: severance benefit and retirement fund lump sum

column 3: all other incomes

what happens if not included in specific inclusions

just say it meets the general definition of gross income, sales