Michael makes a living by fetching workers to and from a nearby factory with an old bus.
Question:
Michael makes a living by fetching workers to and from a nearby factory with an old bus.
However, the old bus that he was driving was not considered as roadworthy by the authorities. He does not have the financial resources to buy a new or even a second-hand bus. He tried to apply for a permit but was rejected many times as the authorities are of the opinion that the bus is not considered as roadworthy. Because of this, the bus fares that he charges the passengers are lower than the market price and the passengers are happy with this arrangement. As he does not have a permit for operating the bus, he did not register his business. Michael is wondering whether he should report his income since the income is illegal. Michael has approached you to advise him whether his income is chargeable to income tax.
Required:
Advise Michael and support your answer with appropriate case law.
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin