Page 75 - Test 1 Slides - 4. Gross Income

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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