With certain specific exceptions the section 1 definition of gross income in the Income Tax Act subjects only receipts and accruals of a non-capital nature for inclusion in the gross income of a taxpayer. The distinction between receipts and accruals of a capital nature and those of a revenue nature is thus key importance in the determination of a taxpayers gross income.

Required: Identify and explain in detail the principles and tests that are applied to distinguish between receipts and accruals of a capital nature and those of a revenue nature.