Page 24 - Test 1 Slides - 4. Gross Income
P. 24

GROSS INCOME




            Accrued to








            Example 4


            • Peter works for a company that manufactures hand-made furniture. In

                terms of his employment contract he is entitled to a monthly salary but
                he is also entitled to 3% of the company’s annual audited profit. He

                worked for the company for the entire 2014 year. On 1 April 2014 the
                company determined the profit for the 2014 year and it paid the
                amount to him on 20 April 2014.


            • What year will the bonus be included in Peter’s gross income


            Solution:

            • Peter is unconditionally entitled to the bonus amount for the year

                ended 28 February 2014 and the amount will be included in his gross
                income. It does not matter that the amount was only calculated and

                paid in the 2015 year. The actual amount is not a determining factor in
                deciding whether the amount will form part of gross income.



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