Receipts from personal exertion: mere gifts or gross income?

Date
2009
Authors
Gupta, Ranjana
Supervisor
Ohms, Chris
Item type
Thesis
Degree name
Master of Business
Journal Title
Journal ISSN
Volume Title
Publisher
Auckland University of Technology
Abstract

This paper explores the gaps that exist with regard to the taxation of receipts from personal exertion. This research examines both the New Zealand legislation and leading cases in New Zealand and other jurisdictions in the area of receipts from personal exertion, to arrive at some conclusions about the circumstances in which those receipts will be found to be either gross income or simply a gift. To determine the legal criteria that identify gifts as personal exertion income within context of s CA 1(1) and s CA 1(2) of the Income Tax Act 2007, the paper sets out and analyse the following proposition:

(1) Ordinary concepts (s CA 1(2)) includes employment income (s CE 1) and business income (s CB 1); or (2) Ordinary concepts (s CA 1(2)), employment income (s CE 1) and business income (s CB 1) are disparate tests.

The paper shows that sections CA 1(1) and CA 1(2) are not mutually exclusive and s CA 1(2) of the Act supplements specific provisions of the Act defining income. In the absence of a clear statutory provision in the Income Tax Act 2007, the paper attempts to explain the underlying principles on which such receipts may be taxed within the broader context of the Income Tax Act 2007. The author hopes that this will serve as a guide for policymakers to take next step to ensure that unfairness caused by those deficiencies does not ultimately undermine the tax system.

Description
Keywords
New Zealand tax legislation , Case law , Gift , Qualitative
Source
DOI
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