Page 90 - SAICA Tax Day 2 Slides

GROSS INCOME

Capital

• Capital vs. Income

• Difficult to determine because subjective

• Tree vs fruit (Visser)

• Fixed (acquired to keep) vs floating (acquired to sell/normal trade)

capital

• Investment vs speculation (Lace Proprietary Mines)

• Golden Rule: Intention of the taxpayer

• Proceeds will be INCOME if asset acquired with the intention

of selling it at a profit (“scheme of profit-making”)

• Proceeds will be CAPITAL if asset acquired and held with the

intention of earning income from that asset e.g. rent, interest

or dividends

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