Original Research
A critical analysis of the meaning of the term ‘income’ in Sections 7(2) to 7(8) of the Income Tax Act No. 58 of 1962
Submitted: 10 March 2016 | Published: 26 April 2017
About the author(s)
Danielle van Wyk, School of Accountancy, University of Stellenbosch, South AfricaMareli Dippenaar, School of Accountancy, University of Stellenbosch, South Africa
Abstract
Aim: The objective of the study is to understand whether the term ‘income’, as used in Sections 7(2) to 7(8) of the Act, is used in its defined sense or if it should be ascribed a different meaning.
Setting: This article examines existing literature in a South African income tax environment.
Method: A non-empirical study of existing literature was conducted by performing a historical analysis within a South African context. A doctrinal research approach was followed.
Results: Possible interpretations determined include ‘income’ as defined in section 1 of the Act, namely ‘gross income’ (also defined) less exempt income, ‘gross income’, profits and gains or ‘taxable income’ (i.e. ‘income’ less allowable expenditure, deductions and losses) and ‘gross income’ less related deductible expenses and losses.
Conclusion: It was found that the meaning of ‘income’, for purposes of Sections 7(2) to 7(8), remains an uncertainty, and it is recommended that the wording of Section 7 be amended to reflect the intended meaning thereof.
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