There is no broad definition in New Zealand of what income is for tax purposes. However, through a number of cases the courts have developed guidelines (also referred to as concepts of income) for determining whether a receipt is income for tax purposes.

Required:

Briefly discuss the following statements:

• (a) A receipt must be a gain or something that comes in.

(Write a few sentences; 3 marks)

• (b) The nature of a receipt depends on its quality in the hands of the recipient.