Construct (Pty) Ltd (Construct) is a South African resident construction company with a February financial year-end....

 

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Construct (Pty) Ltd (Construct) is a South African resident construction company with a February financial year-end. It entered into an agreement to construct a building for a customer at a contract price of R4 000 000. The construction of the building was completed on 15 February 2022 and occupation of the building was given to the customer on the same date. In terms of the contract, 85% of the contract price is due and payable on completion. The other 15% is retained (held back) until the engineer issues a final certificate four months after the completion date, which is 15 June 2022. The respective amounts of R3 400 000 and R600 000 were paid by the customer on 15 February 2022 and 15 June 2022. REQUIRED: Discuss whether the R3 400 000 and the R600 000 will constitute gross income for Construct (Pty) Ltd for the 2022 year of assessment. List the requirements of the gross income definition and briefly discuss each requirement using the given information at hand. MARKS 20 Construct (Pty) Ltd (Construct) is a South African resident construction company with a February financial year-end. It entered into an agreement to construct a building for a customer at a contract price of R4 000 000. The construction of the building was completed on 15 February 2022 and occupation of the building was given to the customer on the same date. In terms of the contract, 85% of the contract price is due and payable on completion. The other 15% is retained (held back) until the engineer issues a final certificate four months after the completion date, which is 15 June 2022. The respective amounts of R3 400 000 and R600 000 were paid by the customer on 15 February 2022 and 15 June 2022. REQUIRED: Discuss whether the R3 400 000 and the R600 000 will constitute gross income for Construct (Pty) Ltd for the 2022 year of assessment. List the requirements of the gross income definition and briefly discuss each requirement using the given information at hand. MARKS 20

Answer rating: 100% (QA)

To determine whether the R3400000 and the R600000 will constitute gross income for Construct Pty Ltd ... View the full answer