Client: RentaGeny (Pty) Ltd owns various generators which they rent out to customers across Gauteng. The companys year of assessment ends on 28 February 2023. A particular generator (the Bela-Bela generator) was purchased for R17 800 on 1 June 2019 with the intention to earn rental income from potential new customers in Bela-Bela, Limpopo. The rental business in Bela-Bela was slow and the company only rented out the generator a few times in the last four years. On 4 February 2023, one of RentaGenys customers enquired from them whether they had a secondhand generator for sale and the company decided to sell the Bela-Bela generator to this customer for an amount of R20 000 on 10 February 2023. REQUIRED: MARKS

(a) List the requirements of the gross income definition of the Income Tax Act. 5

(b) Discuss whether the R20 000 receipt is of a capital nature or not in the hands of RentaGeny (Pty) Ltd in terms of the gross income definition. Strengthen your argument with reference to case law. You may ignore the other requirements of the gross income definition. 13