Capital v Revenue: the income tax test of intention

The purpose of this research was to identify and comment on various interpretive problems posed by using ‘intention’ as a legal test to classify a taxpayer’s taxable gross income. Using an integrative literature review method, the research provides a detailed discussion of the historical interpretation of this test, and identifies various interpretive problems arising from the inconsistent and differing interpretation of this test by the courts. Having identified that certain jurists and authors take guidance from criminal law in their interpretation of intention, an analysis of the approach in this area of law, as well as in the law of delict is made. The difference between motive and intention forms part of this discussion. The conclusion is drawn that intention as it is used in the criminal law is not an appropriate test to be applied in income tax. Having drawn this conclusion, and expanding on an identified jurisdiction a comparison is drawn between the approach by courts in New Zealand and courts in South Africa regarding the purpose with which a taxpayer acquires an asset or undertakes a transaction. The difference between purpose and intention is expanded upon and explained as it is seen by the courts in this jurisdiction. Throughout the body of the treatise certain recommendations are made, and parallels are drawn between the South African approach and the approach in New Zealand