TAX3701 ASSIGNMENT 2 SEMESTER 2 2025 – FULLY ANSWERED (DUE 18 SEPTEMBER 2025)

Description

TAX3701 Assignment 2 Semester 2 Memo | Due 18 September 2025. All questions fully answered. QUESTION 1 (10 marks, 18 minutes)
Moses Patel (Pty) Ltd (MP) is a company that sells animal feed to farmers and operates from Winterton in KwaZulu-Natal Free-State. The company also has a few specialists that assists the farmers with cost effective improvements of feeding supplements for their life stock. This commercial knowledge (know-how payments) passed to the farmers has proven to be very profitable.
The company’s year of assessment ends on 28 February 2025 and is a registered VAT vendor making only taxable supplies. On 27 September 2024, MP received an amount of R95 000 in cash from a big commercial farmer in KwaZulu-Natal for the service rendered by the company’s newly appointed animal feeding supplement specialist.
REQUIRED:
MARKS
Discuss, whether the amount of R95 000 received by Moses Patel (Pty) Ltd will be regarded as gross income as defined in the Income Tax Act for the 2025 year of assessment, supported with relevant legislation and case law principles.
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