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2016/09/061Study unit 2: Administration, returns and assessmentsLearning unit 4: Income of a business entity2BackgroundWhat should you be able to do for this learning unit:1) State the criteria of the gross income definition, and apply them in a practical situation.2) Apply the special inclusions in a taxable income calculation.3) Apply exempted income in a taxable income calculation.3•The definition for gross income relating to a resident and non resident is different.•Distinguish between residents and non residents.•For a company a resident is:-incorporated, established or formed in the republic or-Place of effective management is in the Republic.4•A resident company: Subject to IncomeTax on worldwide income–income insideand outside the Republic.•Non-residents: taxed on a source basis–will not be dealt with in TAX2601.•Refertolearningunit1fordifferencebetweensourcebasisandworldwidebasis.5Gross income definition•In the case of a resident:-the total amount-in cash or otherwise-received by or accrued to, or in favour of a person-during the year of assessment-excluding amounts of a capital nature.•The definition goes further to include items specifically listed (these are specific inclusions and will be dealt with later in this learning unit. 6
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