oa De Jure - Capital versus revenue : some guidance : notes

Volume 45, Issue 1
  • ISSN : 2225-7160



For income tax purposes, the distinction between whether an amount or expenditure is of a capital nature or not is decisive. Receipts and accruals of a capital nature do not form part of the gross income definition (the definition in s 1 of the Income Tax Act 58 of 1962 (the ITA) reads: "...in the case of a resident, the total amount in cash or otherwise, received by or accrued to or in favour of such resident ... excluding receipts or accruals of a capital nature") and as such are not subject to income tax,but are subject to capital gains tax (CGT) (under par 10 Sch 8 ITA depending on the status of the taxpayer only 25% or 50% of a capital gain is included in the tax net - in the 2012 budget it was proposed that the inclusion rate be increased from 1 April 2012 for individuals to 33,3% and for other taxpayers to 66.6%).

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