Itcspecificinclusions

The definition of gross income in Section 8(1) of the Income Tax Act [Chapter 23:06] has two halves. The opening words set the general rule — the total amount received or accrued from a Zimbabwean (or deemed-Zimbabwean) source, excluding amounts "proved by the taxpayer to be of a capital nature." The second half, introduced by the words "and, without derogation from the generality of the foregoing, includes—", sets out a long list of specific inclusion paragraphs, lettered (a) to (s). This lesson is about that list.

The single most important point is what the inclusion paragraphs do to the capital exclusion. The chapeau says the capital exclusion applies "not being an amount included in 'gross income' by virtue of any of the following paragraphs." In other words, if an amount falls within an inclusion paragraph, it is taxable even if it would otherwise have been capital. The inclusion paragraphs are therefore statutory overrides of the capital/revenue boundary covered in the lesson on Capital vs Revenue Receipts. They convert specified receipts — lease-improvement values, fringe benefits, recoupments, trading stock on hand, share-option gains and more — into gross income by force of the statute, regardless of the common-law character of the receipt.

The paragraphs fall into recognisable families. Employment and services: paragraph (b) (amounts for services rendered, leave pay, cessation and commutation payments) and paragraph (f) (the value of any advantage or benefit in respect of employment — the fringe-benefit charge, substituted by the Finance Act 7/2021 with effect from the 2022 year of assessment, including the deemed motoring values of US$625 / US$830 / US$1,250 / US$1,660 per month by engine capacity). Investment and property income: paragraph (a) (annuities), paragraph (d) (premiums and like consideration for the use of land, plant, or intellectual property), paragraph (e) (the value of lease improvements a lessee must make), and paragraph (l) (rent previously deducted then applied to a purchase price). Recoupments and recoveries: paragraphs (i), (j), (k) and (m) (recovery of capital expenditure, of Section 15(2) deductions, of debts forgiven, and of grants/subsidies). Trading stock: paragraph (h) (closing stock and stock taken for private use, valued under the Second Schedule). Pensions and funds: paragraphs (c), (n) and (q) (fund withdrawals and pension commutations). Special sectors: paragraphs (g) (growing crops/timber on land sold), (o) (Designated Areas Grant Scheme), (p) (petroleum operations), (r) (special mining lease operations) and (s) (employee share-option gains, computed with an inflation allowance).

Why does this matter so much? Because the inclusion paragraphs are where ZIMRA collects tax that taxpayers most often assume is non-taxable: the "capital" lease premium, the "perk" of a company car or cheap loan, the "windfall" of a forgiven debt, the recouped allowance. Each paragraph has its own trigger, its own measure of value, and its own provisos — and several are anchored by leading Zimbabwean cases (for example A.T.S. Schools v ZIMRA 16-HH-314 / 17-SC-061 on school-fee benefits, Barclays Bank v ZIMRA 06-SC-031 on the timing of share-option value, and Zacks E. v COT 93-HB-104 on directors' loans).

A drafting note for accuracy: the paragraphs are lettered (a) through (s) in the 27 May 2025 source Act (with one historical numbering quirk around the share-option paragraph). This lesson follows the source Act's lettering. The detailed fringe-benefit valuation rules in paragraph (f) are developed further in the dedicated Fringe Benefits Tax lesson; the recoupment paragraphs (i)/(j) interact with Capital Allowances and Capital vs Revenue; and the framework of Section 8(1) itself was established in the Gross Income lesson, which this lesson assumes and builds upon rather than repeats.

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As established in the lesson on Gross Income, the Section 8(1) definition is the gateway to the entire income tax computation. Its opening limb captures "the total amount received by or accrued to … from a source within or deemed to be within Zimbabwe" and then excludes "any amount … proved by the taxpayer to be of a capital nature." That capital exclusion is the great escape hatch — it is why a once-off realisation of a capital asset, or a true capital receipt, falls outside income tax (and is instead the concern of Capital Gains Tax).

But a pure capital/revenue line drawn by the common law would be unpredictable and would let too much slip through. Some receipts are economically very much like income but are dressed up as capital (a lump-sum "premium" for a lease, say, instead of rent). Others are genuinely difficult to classify (the value of improvements a tenant is obliged to build). And some are policy choices the legislature simply wants to tax (recoupments of allowances previously deducted, or the value of employment perks). The specific inclusion paragraphs are Parliament's answer: a closed list of receipts that are deemed to be gross income whatever their common-law character.

The crucial drafting is in the chapeau of the definition. The capital exclusion is expressed to apply only to an amount "(not being an amount included in 'gross income' by virtue of any of the following paragraphs of this definition)." Read that carefully: an amount that falls within paragraphs (a)–(s) cannot be excluded as capital. The inclusion paragraphs trump the capital exclusion. This is the conceptual heart of the lesson and the source of most exam marks and most audit assessments.

The phrase "without derogation from the generality of the foregoing" is equally important. It means the list is illustrative and reinforcing, not exhaustive of revenue receipts. An amount can still be ordinary gross income under the general words even if it matches no specific paragraph — the paragraphs add to the net, they do not limit it. A common error is to argue "this receipt is not in the list, therefore it is not taxable." That is wrong: the general words catch ordinary income regardless; the paragraphs catch additional amounts (often capital-flavoured ones) that the general words might have missed.

Where does this sit in the chapter? It follows directly from Gross Income (the framework), pairs with Capital vs Revenue Receipts (the boundary the paragraphs override), feeds Fringe Benefits Tax (paragraph (f) in detail), Employment Income & PAYE (paragraph (b)), and Capital Allowances (the recoupment paragraphs (i)/(j)). ZIMRA audit interest is high across the whole list, but especially on paragraph (f) (under-declared benefits), paragraph (d) (premiums and royalties mischaracterised as capital), and the recoupment paragraphs (allowances clawed back on disposal).

All references are to the Income Tax Act [Chapter 23:06], Section 8(1), unless stated. The paragraphs, as they appear in the 27 May 2025 source Act, are as follows.

Paragraph (a) — annuities

Includes "any amount … received or accrued by way of annuity," other than the portion the Commissioner considers to represent a return of capital — i.e. a return of the money paid, or value of the asset given, to acquire the annuity, where no deduction/credit was allowed for that outlay. A proviso fully includes an annuity on retirement (as defined in the First Schedule) acquired from a lump sum referred to in paragraphs 3, 4, 7 or 8 of that Schedule. The policy: the income element of an annuity is taxed; the capital element (the buyer getting their own capital back) is not.

Paragraph (b) — amounts for services rendered and employment

Includes "any amount … received or accrued in respect of services rendered or to be rendered," whether or not due under a contract of employment, plus amounts received "by reason of the cessation of the employment or service" of a person, and amounts "in commutation of amounts due under a contract of employment or service." Provisos deal with leave pay (deemed to accrue proportionately on the last day of each month of leave — proviso (ii)), compensation for leave not taken or cessation (proviso (iii)), and re-engagement/extended-service gratuities for the security forces (proviso (iv), charged at the rate for the year of receipt). This paragraph is the statutory hook for salary, wages, bonuses, leave pay and termination/severance payments (developed in the Employment Income & PAYE lesson).

Paragraph (c) — withdrawals from funds

Includes amounts received by reason of withdrawal from or winding up of a benefit or pension fund or an "unapproved fund" (as defined in the First Schedule), or a benefit (not a pension or gratuity) from Consolidated Revenue Fund contributions, excluding amounts already caught by (a) or (b), lump sums to which the First Schedule relates, and amounts the Commissioner regards as a return of money for which no deduction was allowed. Such amounts are charged at the rate for the year of receipt (proviso).

Paragraph (d) — premiums and like consideration

Includes any amount received or accrued as a premium or like consideration for:

• (i) the right of use or occupation of land or buildings;
• (ii) the right of use of plant or machinery;
• (iii) the right of use of intellectual property (patent, design, trade mark, copyright, model, plan, secret process, formula, or similar);
• (iv) the right of use of any motion picture/television film, sound recording or advertising matter connected with such film/recording;
• (v) the imparting of, or undertaking to impart, knowledge connected with the use of any of the above.

This paragraph taxes the lump-sum "premium" — the up-front payment that is the economic equivalent of rent or a royalty but is often argued to be capital. The annotations in the source Act cite SDC Ltd (2) v ZIMRA 21-HH-338 (royalty on top of licence fees) and P v Commissioner of Taxes 82-ITC-1372 (right of use/occupation).

Paragraph (e) — lease improvements

Where, under an agreement granting the right of use or occupation of land or buildings (or a cession/assignment of such rights), the owner becomes entitled to have improvements effected by another person, paragraph (e) includes either (i) the amount stipulated in the agreement as the value of, or to be spent on, the improvements, or (ii) if none is stipulated, the Commissioner's estimate of their fair and reasonable value. The amount is deemed to accrue in equal monthly instalments over the lesser of the unexpired period of the agreement or 10 years (from the date the improvements were effected). Provisos accelerate any unaccrued instalments on cancellation, sale of the property, or death/insolvency/liquidation of the owner; treat the period as the initial period only where the lease is renewable; and deem an indefinite period to be 10 years.

Paragraph (f) — the value of an advantage or benefit (fringe benefits)

Includes "an amount equal to the value of an advantage or benefit in respect of employment, service, office or other gainful occupation or in connection with the taking up or termination" of it. The definition of "advantage or benefit" was substituted by the Finance Act 7/2021 (w.e.f. the 2022 year of assessment) and now means: (i) board; (ii) occupation of quarters or a residence; (iii) use of furniture or of a motor vehicle; (iv) the use or enjoyment of any other property whatsoever, corporeal or incorporeal, including a loan; (v) an allowance (to the extent not spent on the employer's business and not paid for by the employee); (vi) 30% of the cost of employer-provided home/out-of-office mobile or landline airtime, or broadband/internet data (unless the employer proves business use); and (vii) for teaching/non-teaching school staff, a "school benefit" (waiver of tuition/levies/boarding fees) for up to 3 children, of which only half the cost is included. It also includes a passage benefit.

Key definitions inside paragraph (f): "employee" includes a director of a company, agent or servant; "loan" excludes credit proved to be for the education, technical training or medical treatment of the employee/spouse/child; "passage benefit" is the employer-borne cost of journeys (with one take-up and one termination passage exempt under the chapeau provisos).

Valuation (SUBPARA II): the value of a benefit (other than an allowance) is determined (a) by reference to its value to the employee for the occupation/use of quarters, residence or furniture; and (b) by reference to the cost to the employer for any other benefit. The deemed cost of a motor vehicle (proviso (xi), substituted by Finance Act 13/2019), for the 2020 year of assessment and after, is: US$625 (engine ≤ 1,500 cc); US$830 (>1,500 ≤ 2,000 cc); US$1,250 (>2,000 ≤ 3,000 cc); US$1,660 (> 3,000 cc) per month, reduced proportionately for part-year use. This paragraph is treated exhaustively in the Fringe Benefits Tax lesson; here it is one inclusion among many.

Paragraph (g) — growing crops or timber on land sold

Subject to paragraph 3 of the Seventh Schedule, where land is sold or disposed of and timber or other crops grown for sale are growing on it, the market value of that timber/growing crops at the time of disposal is included. A proviso excludes amounts where the timber/crops were acquired by inheritance or donation and never became trading assets. (Links to the Taxation of Farmers lesson.)

Paragraph (h) — trading stock on hand and taken for private use

Includes "an amount equal to the value, determined in accordance with the Second Schedule, of the trading stock" which, at year-end, has not been disposed of, or which during the year was taken for domestic/private consumption, vested in a trustee on insolvency/death, given away, disposed of otherwise than by sale/exchange, attached under court order, or sold in the course of disposing of the business. This is the statutory basis for bringing closing stock into income (the matching counterpart to the opening-stock deduction) and for taxing stock withdrawn by the owner at its Second Schedule value.

Paragraph (i) — recoupments from capital expenditure

Includes recoupments from capital expenditure which (i) exceed the balance of capital expenditure ranking for redemption under paragraphs 2–5 of the Fifth Schedule (mining capital expenditure), or (ii) are a recovery of amounts allowed under paragraph 6 of the Fifth Schedule. (Interacts with the Capital vs Revenue and Mining lessons; Section 12(5) deems such recoupments Zimbabwean-source even if recouped abroad.)

Paragraph (j) — recovery or recoupment of Section 15(2) deductions

Includes "any amount allowed to be deducted under Section 15(2)" (with listed exceptions — paragraph 5 of the Fourth Schedule, the Sixth Schedule, paragraph 2 of the Seventh Schedule, paragraph 3 of the Fourteenth Schedule) which has been recovered or recouped. A detailed proviso provides rollover relief where the recoupment arises from damage or destruction of an asset and the taxpayer replaces it (purchases/constructs a like asset within 18 months and brings it into use within 3 years); any amount not so reinvested is included. A second proviso prevents exclusion where an employer recovers amounts on winding up a fund or ceasing to be an employer. This is the principal recoupment/clawback of capital allowances and other deductions on disposal (see Capital Allowances).

Paragraph (k) — benefit from a creditor's concession (debt forgiveness)

Includes the value of any benefit from a concession, compromise or arrangement with a creditor whereby a liability that arose from expenditure for which a Section 15(2) deduction was made is reduced or extinguished. Provisos cap the benefit on allowance-bearing assets and disapply the paragraph where the reduction follows insolvency, an assignment for creditors, vesting in the Agricultural Finance Corporation, or a court winding-up for inability to pay debts. Economically: if you deducted the cost and later escaped paying for it, the escaped liability is income.

Paragraph (l) — rent previously deducted, applied to a purchase price

Where a person acquires property and an amount previously paid for the right of use/occupation of that property (rent, premium or otherwise) was allowed as a deduction and is applied in reduction or settlement of the purchase price, that amount is included. Improvements made under an obligation in a use/occupation agreement are deemed to be amounts paid (subparagraph (i)); acquisition for no/inadequate consideration triggers a deemed application up to fair market price (subparagraph (ii)). An election allows the amount to be spread over 6 equal annual instalments (binding; the balance accelerates on disposal).

Paragraph (m) — grants and subsidies

Includes "any amount received or accrued by way of grant or subsidy in respect of any expenditure allowed or allowable as a deduction." If the State (or another) subsidises expenditure you also deduct, the subsidy is income — preventing a double benefit.

Paragraph (n) — over-commutation of a retirement annuity

Includes amounts received by way of commutation of a pension or annuity payable by a retirement annuity fund (rights first contributed on/after 1 August 1970), to the extent they exceed what would have been payable had only one-third of the total value been commuted. The one-third commutation is the tax-favoured limit; the excess is income.

Paragraph (o) — Designated Areas Grant Scheme

Includes any amount received or accrued, directly or indirectly, from the State under the Designated Areas Grant Scheme.

Paragraph (p) — petroleum operations

Includes amounts received or accrued to a petroleum operator which, under the Twentieth Schedule, are income attributable to petroleum operations.

Paragraph (q) — commutation of certain pensions/annuities

Includes amounts by way of commutation of a pension or annuity payable from the Consolidated Revenue Fund or a pension fund (other than a retirement annuity fund) if the pension/annuity itself would not have been subject to income tax. The source Act annotates this with B v COT 00-ICT-1673 (lump sum under a voluntary retirement scheme).

Paragraph (r) — special mining lease operations

Includes amounts received or accrued to the holder of a special mining lease which, under the Twenty-Second Schedule, are income attributable to special-mining-lease operations (links to the Mining lesson).

Paragraph (s) — employee share-option gains

Includes the amount received or accrued on the sale of shares offered to an employee under a share-option scheme, adjusted by a formula: A − C, where A is the sale value of the shares at the time the option is exercised, B is the value of the shares offered under the scheme, and C is B uplifted by an inflation allowance (using the All-items Consumer Price Index at exercise (D) versus at offer (E): C = B × D/E). The effect is to tax the real gain on the option, stripping out inflation on the original offer value. The source Act annotates the timing point with Barclays Bank Ltd v ZIMRA 06-SC-031 (value of shares taken at the date the option is exercised).

C.1 The override mechanism — how an inclusion paragraph defeats the capital exclusion

Begin with the structure. The capital exclusion in Section 8(1) reads (paraphrasing the operative words): exclude any amount "(not being an amount included in 'gross income' by virtue of any of the following paragraphs)" which is proved to be of a capital nature. The bracketed carve-out is the override. Mechanically:

1. Identify the amount and its source (covered in Residence and Source Rules).
2. Ask: does any inclusion paragraph (a)–(s) apply? If yes, include it — full stop. You do not then ask whether it is capital; the capital exclusion is switched off for that amount.
3. Only if no inclusion paragraph applies do you run the ordinary capital/revenue analysis from the Capital vs Revenue lesson.

This ordering matters because many inclusion-paragraph amounts look capital. A lease premium (paragraph (d)) looks like the price of a capital right. Lease improvements (paragraph (e)) look like an accretion to a capital asset. A recoupment (paragraphs (i)/(j)) looks like the return of capital previously sunk into an asset. A debt forgiven (paragraph (k)) looks like a balance-sheet windfall. The paragraphs exist precisely because, without them, taxpayers would (often successfully) argue these are capital and untaxed. The legislature has pre-decided the question.

C.2 "Without derogation from the generality of the foregoing" — the list adds, it does not limit

The phrase tells you the relationship between the general words (total amount … of a revenue nature) and the specific list. The list is subordinate and additive. Two consequences:

• An amount can be gross income under the general words even if no paragraph fits. Ordinary trading profits, professional fees, and rent are caught by the general words; you do not need a paragraph for them.
• The paragraphs principally do work at the capital boundary, sweeping in capital-flavoured amounts the general words would miss. So when you reach for a paragraph, you are usually asking "is this otherwise-capital amount nonetheless caught?"

The error to avoid is the expressio unius fallacy — "it's not on the list, so it's exempt." The list is not a list of everything taxable; it is a list of extra things made taxable.

C.3 Measuring the amount — each paragraph carries its own yardstick

A defining feature of the inclusion paragraphs is that they do not merely say "include X" — they tell you how to value X, and the measures differ:

• Market value — paragraph (g) (growing crops/timber).
• Second Schedule value — paragraph (h) (trading stock).
• Value to the employee vs cost to the employer — paragraph (f) (SUBPARA II), the distinction litigated in A.T.S. Schools and O v COT.
• Deemed fixed values — paragraph (f) motoring benefit (US$625/830/1,250/1,660 per month).
• Stipulated or fair value, spread over time — paragraph (e) (lease improvements, monthly over the lesser of the lease term or 10 years).
• Formula with inflation allowance — paragraph (s) (share options, A − B×D/E).
• Excess over a threshold — paragraph (n) (commutation above the one-third limit).
• Residual income element — paragraph (a) (annuity, excluding the capital-return portion).

You must apply the correct yardstick for the paragraph; using "cost to employer" where the statute says "value to the employee" (or vice versa) is a classic assessment dispute.

C.4 Timing — when the included amount accrues

Several paragraphs modify the ordinary accrual rule (see Gross Income and Section 10):

• Paragraph (b) — leave pay accrues proportionately on the last day of each month of leave (proviso (ii)).
• Paragraph (e) — lease improvements accrue in equal monthly instalments over the lesser of the unexpired term or 10 years, with acceleration on cancellation/sale/death.
• Paragraph (l) — an election to spread over 6 equal annual instalments, accelerating on disposal.
• Paragraphs (b)(iv), (c) — certain amounts charged at the rate for the year of receipt notwithstanding the general charging rule.
• Paragraph (s) — value fixed at the date the option is exercised (Barclays Bank).

C.5 The recoupment logic (paragraphs (i), (j), (k), (m))

A recoupment paragraph reverses an earlier tax benefit. The logic is symmetry: if you deducted an amount (or claimed an allowance) and later got it back (by recovery, by selling the asset for more than its tax value, by having a debt forgiven, or by being subsidised), the recovery is income to the extent of the earlier benefit. Paragraph (j) is the general recoupment of Section 15(2) deductions and Fourth Schedule allowances; paragraph (i) is the mining-specific recoupment of Fifth Schedule capital expenditure; paragraph (k) catches forgiven liabilities behind deducted expenditure; paragraph (m) catches grants/subsidies for deductible expenditure. The rollover relief in paragraph (j) (replace a damaged/destroyed asset within 18 months/3 years) is a deliberate softening so that genuine reinvestment is not penalised. These mechanics are developed in the Capital Allowances lesson; here, grasp that the recoupment paragraphs are the income-side mirror of the deduction system.

D.1 Individuals

Scenario 1 — termination payment (paragraph (b)). Farai is retrenched and receives a US$8,000 severance payment plus US$1,200 for accrued leave not taken. Both are amounts received "by reason of the cessation of employment" and for leave, squarely within paragraph (b) — taxable as gross income (subject to any specific exemption in the Third Schedule, considered in the Exempt Income lesson). Tax at his marginal rate (up to 40% for YA 2025 on income above US$36,000).

Scenario 2 — company car and cheap loan (paragraph (f)). Nyasha, a marketing manager, is given the use of a 2,500 cc company car all year and an interest-free US$10,000 loan. The motoring benefit is the deemed value of US$1,250 per month = US$15,000 for the year (paragraph (f), proviso (xi)). The loan is a benefit under "any other property … including a loan" (paragraph (f)(a)(iv)); its value is the interest forgone measured by reference to cost to the employer/benchmark (developed in Fringe Benefits Tax). Both are added to her taxable income and run through PAYE.

Scenario 3 — share option (paragraph (s)). Tatenda was offered 1,000 shares at US$2 each (B = US$2,000). She exercises when they are worth US$5 each (A = US$5,000). CPI at offer (E) = 100; at exercise (D) = 120, so the inflation allowance gives C = US$2,000 × 120/100 = US$2,400. The included amount is A − C = US$5,000 − US$2,400 = US$2,600, valued at the exercise date (Barclays Bank v ZIMRA 06-SC-031).

D.2 SMEs and partnerships

Scenario 4 — lease premium (paragraph (d)). Chido's Boutique (a sole trader) sublets part of its shop and receives a US$6,000 up-front premium for granting a 3-year right of occupation. Although the boutique may regard the premium as a capital lump sum, paragraph (d)(i) includes a premium … for the right of use or occupation of land or buildings in gross income. The full US$6,000 is taxable in the year of accrual (subject to any timing relief), notwithstanding its "capital" feel (P v COT 82-ITC-1372).

Scenario 5 — closing stock and own use (paragraph (h)). A hardware SME has US$40,000 of unsold stock at year-end and the owner took US$2,000 of stock home for personal use. Paragraph (h) brings the US$40,000 closing stock into income (matched by next year's opening-stock deduction) and includes the US$2,000 of stock taken for private consumption at its Second Schedule value. Forgetting the own-use inclusion is a frequent SME audit finding.

Scenario 6 — debt forgiveness (paragraph (k)). A supplier writes off US$5,000 owed by an SME for inventory the SME had already deducted as cost of sales. Under paragraph (k), the US$5,000 benefit from the creditor's concession — relating to expenditure for which a Section 15(2) deduction was taken — is included in gross income (unless the reduction arose through insolvency/court winding-up, which the provisos exclude).

D.3 Large corporates and multinationals

Scenario 7 — lease improvements (paragraph (e)). PropCo Ltd leases land to a manufacturer for 15 years; the lease requires the tenant to build a US$1.5 million factory which reverts to PropCo. Under paragraph (e), the US$1.5 million improvement value is included in PropCo's gross income, spread in equal monthly instalments over the lesser of the unexpired lease term or 10 years — i.e. over 10 years (US$150,000 per year, or US$12,500 per month). If the lease is cancelled early, the unaccrued balance accelerates into income in that year.

Scenario 8 — recoupment on disposal (paragraph (j)). MineCo sells plant for US$300,000 that had cost US$500,000 and on which it had claimed US$400,000 of capital allowances (tax value US$100,000). The excess of proceeds over tax value, to the extent of allowances granted, is a recoupment under paragraph (j) — US$200,000 (US$300,000 − US$100,000) is included in income (the portion above original cost would be a capital gain). If instead the plant was destroyed and MineCo reinvests in like plant within 18 months/3 years, the rollover proviso defers the recoupment.

Scenario 9 — subsidy (paragraph (m)). A corporate receives a US$250,000 government grant towards training costs it also deducts under Section 15(2). Paragraph (m) includes the US$250,000 grant in gross income, neutralising the double benefit.

The following authorities are annotated in the source Act against the relevant inclusion paragraphs. Zimbabwean/Rhodesian decisions guide strongly; any foreign authority is persuasive only.

• A.T.S. Schools v ZIMRA 16-HH-314, on appeal 17-SC-061 (Zimbabwe) — paragraph (f) school-fee benefit and the valuation rule (SUBPARA II: value to employee vs cost to employer). Establishes how concessionary school fees for staff children are valued and included.
• Barclays Bank Ltd v ZIMRA 06-SC-031 (Zimbabwe, SC) — paragraph (s) share options: the value of shares is taken at the date the option is exercised, fixing the timing of the included amount.
• Zacks E. v COT 93-HB-104 (Zimbabwe) — paragraph (f) directors' loans treated as a taxable benefit (and relevant to deemed-dividend analysis in Withholding Taxes).
• "Fringe benefits" v COT 93-ITC-1590 (Zimbabwe) — paragraph (f): a director/employee occupying their own flat; the boundary of a taxable accommodation/benefit.
• O v Commissioner of Taxes 82-ITC-1374 (Zimbabwe) — paragraph (f): valuation of occupation of quarters/residence by reference to value to the employee.
• H v COT 89-ITC-1512 (Zimbabwe) — paragraph (f): restraint-of-trade / termination-period payments in connection with employment.
• LFCZ Ltd v ZIMRA 19-HH-164; IAB Company v ZIMRA 22-HH-032; Zimplats v ZIMRA 23-SC-016 (Zimbabwe) — paragraph (f): the "employees' business-purposes" test for meals/canteen/lunch-pack provision; operational feeding of shift/remote workers (e.g. lunch packs in an exclusive mining village — Zimplats) distinguished from general staff perks.
• SDC Ltd (2) v ZIMRA 21-HH-338 (Zimbabwe) — paragraph (d): a royalty paid on top of licence fees as a premium/like consideration.
• P v Commissioner of Taxes 82-ITC-1372 (Zimbabwe) — paragraph (d)(i): premium for the right of use or occupation of land/buildings.
• B v COT 00-ICT-1673 (Zimbabwe) — paragraph (q): a lump sum under a voluntary retirement scheme and the commutation rule.

1. Arguing "capital" against an inclusion paragraph. Once an amount falls within paragraphs (a)–(s), the capital exclusion is switched off by the chapeau carve-out. Do not waste an argument proving a lease premium or recoupment is "capital" — the statute has already decided.
2. Reading the list as exhaustive. "Not on the list, so not taxable" is wrong. The general words tax ordinary income regardless; the paragraphs add to the net ("without derogation from the generality").
3. Using the wrong valuation yardstick in paragraph (f): "value to the employee" for quarters/residence/furniture, but "cost to the employer" for everything else (A.T.S. Schools, O v COT).
4. Missing the deemed motoring values. The car benefit is the fixed deemed monthly amount by engine capacity (US$625/830/1,250/1,660), not actual running cost — and is time-apportioned for part-year use.
5. Omitting stock taken for own use (paragraph (h)). Owners frequently forget that stock withdrawn for personal consumption is included at its Second Schedule value.
6. Forgetting recoupments on disposal (paragraphs (i)/(j)). Selling an asset on which allowances were claimed triggers a recoupment up to the allowances granted; only the excess over original cost is a capital gain.
7. Ignoring debt forgiveness and subsidies (paragraphs (k), (m)). Forgiven trade debts behind deducted expenditure, and grants for deductible costs, are income — a double benefit the statute closes.
8. Mishandling the share-option inflation allowance (paragraph (s)). The included amount is A − C, where C uplifts the offer value B by CPI (D/E); using the raw offer value B overstates the gain.
9. Spreading lease improvements over the wrong period (paragraph (e)). It is the lesser of the unexpired lease term or 10 years, with acceleration on early termination — not simply the full lease term.

Work through the questions one at a time. Choose an answer and it is graded immediately, with an explanation and the provision it comes from. Your progress is saved, so you can stop and resume.

• Section 8(1) has a general limb and a specific-inclusion list (a)–(s). The list is introduced by "without derogation from the generality of the foregoing, includes—."
• Inclusion paragraphs override the capital exclusion. The chapeau excludes capital amounts "not being … included by virtue of any of the following paragraphs" — so a paragraph amount is taxed even if it looks capital.
• The list is additive, not exhaustive. Ordinary income is caught by the general words; the paragraphs sweep in extra (often capital-flavoured) amounts. "Not on the list" ≠ "not taxable."
• Employment/services: (b) services, leave, cessation and commutation; (f) advantage or benefit (fringe benefits, substituted FA 7/2021; deemed car values US$625/830/1,250/1,660; "employee" includes a director).
• Property/investment: (a) annuities (income element only); (d) premiums/like consideration (land, plant, IP, films, know-how); (e) lease improvements (spread over lesser of term or 10 years); (l) deducted rent applied to purchase price.
• Recoupments/recoveries: (i) Fifth Schedule capital expenditure; (j) recovery of Section 15(2) deductions/Fourth Schedule allowances (with replacement rollover); (k) debt forgiveness behind deducted expenditure; (m) grants/subsidies for deductible expenditure.
• Trading stock: (h) closing stock and own-use stock at Second Schedule value.
• Pensions/funds: (c) fund withdrawals; (n) commutation above the one-third limit; (q) commutation of otherwise-untaxed pensions.
• Special sectors: (g) growing crops/timber on land sold (market value); (o) Designated Areas Grant Scheme; (p) petroleum (Twentieth Schedule); (r) special mining lease (Twenty-Second Schedule); (s) share options (A − B×D/E, exercise-date value).
• Each paragraph carries its own yardstick and timing — market value, Second Schedule value, value-to-employee vs cost-to-employer, deemed fixed amounts, formula with inflation allowance, threshold excess, monthly spread.
• Leading cases: A.T.S. Schools 16-HH-314/17-SC-061 (school-fee benefit/valuation), Barclays Bank 06-SC-031 (share-option timing), Zacks E. 93-HB-104 (directors' loans), SDC Ltd (2) 21-HH-338 and P v COT 82-ITC-1372 (paragraph (d) premiums), Zimplats 23-SC-016 / IAB 22-HH-032 / LFCZ 19-HH-164 (business-purpose feeding), B v COT 00-ICT-1673 (paragraph (q)).

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Table 1 — The Section 8(1) inclusion paragraphs at a glance

Para	What is included	Measure / key feature
(a)	Annuities	Income element only (capital-return portion excluded)
(b)	Services, leave pay, cessation & commutation payments	Accrual; leave proportionate monthly
(c)	Withdrawal/winding-up of benefit/pension/unapproved fund	Charged at year-of-receipt rate
(d)	Premium/like consideration for use of land, plant, IP, films, know-how	Full premium; overrides "capital"
(e)	Lease improvements by another	Stipulated/fair value, spread over lesser of term or 10 yrs
(f)	Advantage or benefit re employment (fringe benefits)	Value to employee / cost to employer; car US$625–1,660/mo
(g)	Growing crops/timber on land sold	Market value (Seventh Schedule)
(h)	Trading stock unsold or taken for own use	Second Schedule value
(i)	Recoupment from capital expenditure	Excess over Fifth Schedule balance (mining)
(j)	Recovery/recoupment of Section 15(2) deductions & allowances	Up to allowances granted; replacement rollover
(k)	Benefit from creditor's concession (debt forgiveness)	Value of liability reduced/extinguished
(l)	Deducted rent/premium applied to purchase price	Optional 6-instalment spread
(m)	Grant or subsidy for deductible expenditure	Full amount (anti-double-benefit)
(n)	Over-commutation of retirement annuity	Excess above one-third commutation
(o)	Designated Areas Grant Scheme receipts	Full amount
(p)	Petroleum operations income	Twentieth Schedule
(q)	Commutation of otherwise-untaxed pension/annuity	Full amount
(r)	Special mining lease income	Twenty-Second Schedule
(s)	Employee share-option gain	A − (B × D/E); exercise-date value

Table 2 — Inclusion paragraph vs the capital exclusion

Question	Capital exclusion (general limb)	Inclusion paragraph (a)–(s)
Does "proved to be capital" help the taxpayer?	Yes — excludes the amount	No — overridden by the chapeau carve-out
Typical receipts	Once-off realisation of a capital asset	Premiums, benefits, recoupments, forgiven debts
Order of analysis	Applied only if no paragraph fits	Checked first; if it applies, include and stop
Onus	Taxpayer proves capital nature	Commissioner shows the paragraph applies
Next step if excluded/included	Consider Capital Gains Tax	Add to gross income

Diagram — Is the receipt a specific inclusion?

flowchart TD
 A[Amount received or accrued, Zim source] --> B{Falls within an inclusion paragraph a to s?}
 B -->|Yes| C[Include in gross income now]
 C --> D[Apply the paragraph's own measure and timing]
 B -->|No| E{Income under the general words?}
 E -->|Yes| C
 E -->|No| F{Proved to be of a capital nature?}
 F -->|No| C
 F -->|Yes| G[Exclude from gross income; consider Capital Gains Tax]

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Statutes & sections (Income Tax Act [Chapter 23:06])

• Section 8(1) — definition of "gross income"; the chapeau carve-out making inclusion paragraphs override the capital exclusion; "without derogation from the generality of the foregoing, includes—".
• Section 8(1)(a)–(s) — the specific inclusion paragraphs detailed above (annuities; services/employment; fund withdrawals; premiums; lease improvements; advantage or benefit; growing crops; trading stock; recoupments; debt-forgiveness benefit; deducted rent applied to price; grants/subsidies; pension commutations; Designated Areas Grant Scheme; petroleum; special mining lease; share options).
• Section 8(1) "advantage or benefit" (SUBPARA I, substituted Finance Act 7/2021, w.e.f. YA 2022); SUBPARA II valuation (value to employee vs cost to employer); proviso (xi) deemed motoring values (Finance Act 13/2019): US$625/830/1,250/1,660 per month.
• Schedules referenced by the paragraphs — First Schedule (lump sums/annuities on retirement); Second Schedule (trading-stock valuation); Fourth Schedule (capital allowances, recouped under (j)); Fifth Schedule (mining capital expenditure, (i)); Seventh Schedule (farming, (g)); Twentieth Schedule (petroleum, (p)); Twenty-Second Schedule (special mining lease, (r)).
• Section 12(5) — recoupments under (i)/(j) deemed Zimbabwean-source even if recouped abroad (see Residence and Source Rules).

Finance Act [Chapter 23:04]

• Rates for YA 2025: individuals to 40% above US$36,000; companies/trusts 25% (Section 14(2)(c)); plus AIDS Levy surcharge.

Case law (annotated in the source Act against the stated paragraphs)

• A.T.S. Schools v ZIMRA 16-HH-314 / 17-SC-061 — paragraph (f) school-fee benefit; valuation.
• Barclays Bank Ltd v ZIMRA 06-SC-031 — paragraph (s) share options; exercise-date value.
• Zacks E. v COT 93-HB-104 — paragraph (f) directors' loans as benefit.
• "Fringe benefits" v COT 93-ITC-1590; O v COT 82-ITC-1374 — paragraph (f) accommodation/quarters valuation.
• H v COT 89-ITC-1512 — paragraph (f) restraint-of-trade/termination payments.
• LFCZ Ltd v ZIMRA 19-HH-164; IAB Company v ZIMRA 22-HH-032; Zimplats v ZIMRA 23-SC-016 — paragraph (f) business-purpose feeding test.
• SDC Ltd (2) v ZIMRA 21-HH-338; P v COT 82-ITC-1372 — paragraph (d) premiums/like consideration.
• B v COT 00-ICT-1673 — paragraph (q) voluntary-retirement lump sum.

Related lessons

• Gross Income (the Section 8 framework), Capital vs Revenue Receipts (the boundary these paragraphs override), Fringe Benefits Tax (paragraph (f) in full), Employment Income & PAYE (paragraph (b)), Capital Allowances (recoupment paragraphs (i)/(j)), Taxation of Farmers (paragraph (g)), Taxation of Mining Operations (paragraphs (i)/(r)/(p)).