Page 14 - Gross Income class slides

GROSS INCOMEOSS INCOME
GR

Received by

Example 1

• Maria is 75 years old. She is very distrustful of banks. Because of this she

hid R2 000 000 under the squeaky floorboard in the corner of her kitchen.
If she had invested this in the bank she would have earned a market-

related related interest of R240 000 for the year.

• Her grandson told her that she should include R240 000 in her gross

income as that is the money that she could have earned and it is not
SARS’s fault that she did not invest it. Do you agree with her grandson?

Solution:

• No, her grandson is wrong. A notional amount of income can never be

treated as gross income as Maria did not receive it nor did the amount

accrue to her. This is an application of the Lategan case as she did not
become entitled to it. It also shows application of the Mooi case as she did

not become unconditionally entitled to it.

14