Page 22 - Test 1 Slides - 4. Gross Income

GROSS INCOME

Accrued to

Example 2

• Rob is a non-executive director of a JSE-listed company. He is paid for
the board meetings that he attends. He attends these meetings on a
monthly basis. He is entitled to an amount of R20 000 per meeting that
he attends. He received an amount of R240 000 on 1 May 2014 for the
12 meetings he had attended during the 2014 year of assessment.

• In which year would the directors’ fees be included in his income?

Solution:

• The amount will be included in his income on the earlier of receipt or
accrual. Each time he attended a meeting R20 000 accrued to him as he
became unconditionally entitled to the amounts (Lategan case and

Mooi case).

• He will thus include the full amount of R240 000 in the gross income for
the year of assessment ended 28 February 2014. The fact that it was
only paid in the 2015 year of assessment does not affect the year of
assessment in which it is reflected in the gross income.

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