TaxTami

Introduction: Section 8(1) of Zimbabwe's Income Tax Act [Chapter 23:06] defines "gross income" as the total amount in cash or otherwise, received by or accrued to (or deemed to be received by or accrued to) a person in any year of assessment from a source within or deemed to be within Zimbabwe, other than amounts of a capital nature. The law then specifically enumerates certain inclusions -- (a) through (n) -- that must be included in gross income (even if they might otherwise be argued as capital or exempt). We will examine each of these specific inclusions in turn, explaining their scope, providing real-world examples, relevant case law, exceptions (such as in-kind receipts or lump sums), and any updates (including 2026 budget proposals) affecting them.

What is included: Any amount received or accrued by way of an annuity (including pension payments) is included in gross income. An annuity means a fixed sum payable regularly (usually yearly or monthly) for life or for a set period. This covers pensions for past services (employment pensions), purchased annuities from insurance, and even annuities arising from a will or gift.

Explanation: Each periodic payment from an annuity or pension is taxable as income. However, if part of that payment represents a return of the recipient's own capital contributions, that portion is excluded from tax. For example, if an employee contributed to a pension fund out of after-tax income (no deduction was allowed for contributions), then a proportional part of each pension payment -- representing the return of those contributions -- is not taxable. The Act effectively allows the recovery of one's non-deductible contributions tax-free, taxing only the balance which is akin to investment earnings (interest) on those contributions. In the case of a purchased annuity (e.g. you pay a lump sum to an insurer for a 10-year annuity), only the interest component of each payment is taxable -- calculated via the formula I = P -- (A/N) (Interest = annual payment minus purchase price/number of years). Once the full purchase price has been recovered, all further payments are fully taxable. If an annuity is for life (indefinite period), the law limits the "capital recovery" period to 10 years -- beyond that, all payments are taxable.

Example: Ms. N (age 49) takes early retirement. Her pension fund pays her an annuity of USD 40,000 per month for 5 years (60 months). Over her career she had contributed USD 600,000 to the fund, which was not tax-deductible. In the first year, she receives 6 monthly payments = USD 240,000. She may exclude the portion representing her own contributions: USD 600,000/60 × 6 = USD 60,000. Thus USD 180,000 is taxable in that year. If instead Mr. D buys a 10-year annuity for USD 150,000 that pays him USD 20,000 annually, the taxable portion of each year's USD 20,000 is (20,000 -- 150,000/10) = USD 5,000 (the remainder is return of capital). Should he outlive the 10-year term (i.e. continue receiving payments beyond recovering USD 150,000), all further payments become fully taxable.

Relevant Case Law: CIR v. Milstein (1942) is often cited to distinguish a true annuity from a capital sale price. In that case, payments to the seller of a business were held to be an annuity (and thus income) because the principal was extinguished in exchange for recurring payments. By contrast, if the principal of a sale remains owing (a debt), payments may be viewed as installment payments of a capital amount. Another illustration is ITC 77 (SA): an annuity created under a will or as a gift is still taxable in full in the beneficiary's hands (the "personal gift" origin doesn't exempt it). The principle is that an annuity is an income stream, regardless of source, unless a specific exclusion applies (like return of one's own capital).

Key exception: Pension received by a person aged 55 or above is exempt from income tax. In other words, once a taxpayer reaches 55, their regular pension annuities cease to be taxable (this encourages retirement savings). For example, if Ms. N above had been 60, her pension income would be entirely tax-free under para.6(h) of the Third Schedule. (Lump sum commutations of pension are dealt with under (n) below). Additionally, annuities paid as compensation for injury or death (e.g. under the Workers' Compensation Fund or War Victims Compensation Act) are specifically exempt -- such payments are viewed as akin to damages rather than ordinary income.

2026 Update: No changes were proposed to the taxation of regular annuities/pensions in the 2026 Budget. The age-55 exemption remains in force. However, the tax-free bonus threshold (a related relief for employment income) was adjusted -- in 2024 it's USD 700 (foreign currency) and ZWL 7.5 million for local currency bonuses, and from 2024/25 the foreign-currency bonus exemption is USD 400. These bonus thresholds (though not an "annuity," they concern periodic payments) are updated by Finance Acts and relevant to section 8(1)(b) (employment income) next.

What is included: Any amount received or accrued in respect of services rendered or by virtue of employment or office must be included in gross income. This provision is extremely broad, covering all forms of compensation for employment or services, whether from a past, present, or prospective employer. It explicitly includes: salaries, wages, overtime pay, bonuses, commissions, fees, gratuities, allowances, tips from third parties, awards, and compensation for loss of employment. Even voluntary ("ex gratia") payments are taxable if there is a causal link to services rendered. In short, if an amount is paid "for services" -- as remuneration or as an incentive/reward -- it falls under section 8(1)(b).

Explanation: This inclusion ensures that all earnings from employment are taxed. The form of payment is irrelevant -- cash, check, bank transfer, or in-kind payments (goods or services given in lieu of cash) all count at their monetary value. It also covers one-time and termination payments: e.g. a "golden handshake" severance package, payment in lieu of notice, or accrued leave pay on termination. These are all considered gains "by virtue of employment." Notably, a payment can still be "for services" even if made after the employment ends (like a gift or allowance to a retiree) -- unless the payer can show it was motivated purely by personal esteem or compassion rather than the employment. For example, if an employer gives a longtime employee a parting gift of shares or a car upon retirement, that is remuneration (taxable) because it's in appreciation of the employee's service. However, if friends (or even the employer, in rare cases) make a payment purely out of personal sentiment, unrelated to any service, it may be non-taxable. The courts have drawn this line in cases like Reed v Seymour (UK), where a genuine testimonial gift to a retiring sportsman was held not taxable -- the tricky part is proving the motive was personal rather than as reward for work.

Relevant Case Law: Many cases illustrate what counts as "for services." In Hochstrasser v Mayes (1959), a payment to an employee to cover a loss on house sale was held not taxable because it was genuinely to compensate a loss, not as reward for services. Conversely, in COT v Mwayera (1988) (Zim High Court), a severance payment was held taxable -- it arose from the employment contract's termination (clearly by virtue of employment). The principle is captured in the oft-cited words of Judge Vorsatz: "If money is paid to a person in respect of employment -- whether as a quid pro quo for work done, as an inducement to enter employment, or as compensation for leaving employment -- it falls into the tax net". Additionally, tips from third parties are explicitly covered; although not paid by the employer, they are received in the course of performing employment duties. Zimbabwe follows the reasoning of cases like ITC 1545 (SA) where a waitress's tips were taxable.

One important carve-out from case law: If a payment is purely personal (stemming from personal relationship or admiration, not employment), it may escape tax. For example, if a grateful client gives a longtime consultant a farewell gift not obligated or expected in the contract, that could be argued as a personal gift. CIR v Kelly (SA) and similar cases show courts examining the dominant purpose of a payment. Zimbabwe's tax law codifies some of this: e.g. compensation for personal injury or death is exempt (Third Schedule para 7) even if paid by an employer. Also, in the special case of school staff tuition benefits, the law provides a partial concession: teachers whose children attend the school at reduced fees are only taxed on half the value of that benefit (and only for up to three children). This came from the landmark "Trust Schools" case (2017) -- six private schools vs ZIMRA -- where the Supreme Court upheld that concessionary tuition for staff children is a taxable fringe benefit equal to the fees waived. The court, however, noted the law's proviso (para 9 of the 3rd Schedule) that only 50% of such benefit is taxable for up to three children of an employee. In Arundel School & Others v ZIMRA (SC 61-17), the schools argued the fee waivers weren't taxable or were over-valued, but the court ruled the full foregone fees are a benefit under 8(1)(f) (see section (f) below) and should have been subjected to PAYE. This case confirms that even "indirect" remuneration (not in cash) is taxable -- reinforcing the breadth of section 8(1)(b) in conjunction with 8(1)(f).

Exceptions and 2026 Updates: There is no general exclusion for lump sums under (b) except those specifically provided by the Act. As noted, retrenchment compensation enjoys a limited exemption (updated in Finance Act 13 of 2023): for 2024/25, the exempt portion is the greater of US$3,200 or 1/3 of the package, capped at one-third of US$15,100 (≈US$5,033). The 2026 budget did not announce further changes to these figures, meaning the 2024 thresholds likely still apply in 2025 (though inflation-adjusted for ZWL payouts). Another implicit exception: payments truly unrelated to services (e.g. a gift on compassionate grounds to a deceased employee's family) are not income -- the Act's Third Schedule confirms this by exempting "any amount paid to an employee's estate or family for sickness, injury or death" by an employer, trade union, or fund. For instance, a NSSA funeral grant or employer's bereavement token would not be taxable.

In summary, section 8(1)(b) casts a wide net over all employment earnings. Tax students should remember "gross income = all that comes in (unless proven capital)" -- a salary, bonus, honorarium, stipend, or even non-cash reward from one's job is taxable. The logic is that such amounts represent a gain from labor and thus part of the taxpayer's assessable income.

What is included: Any amount received by a person as a pension or benefit fund withdrawal prior to retirement -- often called a "pension refund" or "terminal benefit" -- is included in gross income. In essence, if you leave a pension, provident, or benefit fund and take a lump sum (or a fund is wound up and pays out members), that lump sum is taxable under section 8(1)(c). This captures cases where an employee withdraws from a pension fund or changes jobs and opts to take the accumulated benefit in cash, rather than waiting for a pension. It also covers payouts when a pension/benefit fund is liquidated before retirement age.

Explanation: Such lump-sum withdrawals are not "pensions" (annuities) but rather one-time payments of accumulated contributions and earnings. The law deems them income (even though they might feel like a return of one's savings) because tax relief was often granted on contributions or growth of the fund. To ensure symmetry, when the money comes out other than as a regular pension, it is taxed. These amounts are termed "terminal benefits" in the First Schedule. However, there is a specific tax concession: The first portion of a pension withdrawal is tax-free, and further concessions apply if the money is transferred into another approved fund or annuity. According to the Act and current regulations, when computing taxable income from a pension/benefit fund withdrawal, one may deduct: (i) a prescribed amount (currently ZWL $18,000 which was historically USD 1,800), (ii) any amount used to purchase a retirement annuity, and (iii) any amount transferred to another pension or benefit fund. Only the balance is taxable. Essentially, the law encourages you to roll over your benefit into another fund or annuity by making those rollovers tax-free. What you cash out beyond the small prescribed allowance becomes gross income.

Example: Mrs. W (age 37) resigns and receives a lump sum of ZWL 198,000 from her employer's pension fund. She immediately uses ZWL 100,000 to buy a retirement annuity and transfers ZWL 20,000 into a new employer's pension plan, leaving ZWL 78,000 she pockets. The first ZWL 18,000 is the tax-free portion. She can also deduct the ZWL 100k annuity purchase and ZWL 20k transfer. So her taxable amount = 198,000 -- 18,000 -- 100,000 -- 20,000 = ZWL 60,000. This ZWL 60,000 will be subject to tax at a special lump-sum rate. Notably, pension withdrawals are taxed using a special flat rate: typically the recipient's highest marginal rate (or 20% if their other income is below the tax threshold). In Mrs. W's case, if her other income for the year places her in the 40% bracket, the ZWL 60k is taxed at 40% (with no AIDS levy on such lump sums). A PAYE tax directive from ZIMRA is usually required to compute the exact tax on these lump sums.

Relevant Law/Notes: The First Schedule defines "terminal benefit" as any one-time payment from a benefit/pension fund due to withdrawal or fund winding-up (excluding annuities). Thus, section 8(1)(c) works with the Schedule to tax those payments. There isn't much case law disputing this in Zimbabwe -- it's straightforward legislated inclusion. The tax policy intent is clear: to prevent early withdrawals from escaping tax that a pension would have paid over time. The rules are analogous to South Africa's and others' treatment of "cash out" of retirement funds (often subject to separate lump-sum tax tables). Zimbabwe's approach is to include it in gross income but at a flat rate.

Exceptions: If instead of cashing out, the person preserves the funds (e.g. transfers the whole amount to another approved pension fund), then nothing is included in gross income at that time. Only actual cash received is taxed, after the small exempt amount. Also, any portion of a withdrawal that represents the individual's own contributions that were not tax-deductible might arguably be non-taxable (though in practice, most employee pension contributions in Zimbabwe are deductible under s15(2)(h) up to certain limits, so this rarely applies). Finally, note that retrenchment situations can affect pension taxation: If someone is retrenched (involuntarily) and takes a pension lump sum, there is an additional exemption: para 6(h1) of the Third Schedule exempts "the first US$10,000 or one-third (whichever greater)" of a pension commutation for an employee retrenched under age 55. (In local currency, this was ZWL 50,000 or 1/3 up to ZWL 80,000 by 2019, figures since adjusted -- in 2024 the USD values were lowered to US$5,000 cap as mentioned). So if that applies, the tax-free portion might be larger for a retrenched employee's fund payout.

2026 Update: The 2026 Budget did not specifically revise pension withdrawal taxation. The major changes in recent years (Finance Act 2023) were the reduction in retrenchment/pension lump sum exemptions to tighten the relief (as noted earlier). Tax authorities have also streamlined administration: ZIMRA now often requires employers to compute retrenchment package tax without waiting for a directive (as of 2024), meaning companies must apply the law's formula directly. Tax students should be aware that these one-off payments are handled distinctly from regular salary -- often via separate tax tables or flat rates to ensure fairness.

In summary, if you take money out of your retirement fund early, expect a tax hit. Section 8(1)(c) makes such payouts part of gross income, subject to some relief for a base amount and rollovers. This discourages premature withdrawals and preserves the principle that retirement savings eventually get taxed when enjoyed as income.

What is included: Any amount received as a premium or like consideration for the right of use or occupation of property is included in gross income. In plainer terms, if a person (a lessor or licensor) receives an upfront lump sum payment (or non-periodic payment) from a lessee or another person for granting a lease, tenancy, or license to use property, that payment is taxable in full when received or accrued. Section 8(1)(d) covers not just land/buildings, but a wide range of property rights -- it explicitly lists: premiums for the use of or right to occupy land or buildings, plant or machinery, as well as for the use of any patent, design, trademark, copyright, model, plan, secret process or formula, or other similar property, and even payments for the use of motion picture films, television films, sound recordings, or advertising matter connected with such films. It also includes any lump sum paid for imparting or undertaking to impart scientific, technical, industrial or commercial knowledge/know-how in connection with the use of the above property.

Explanation: A lease premium is a classic example -- this is a one-time payment by a new tenant to a landlord (often at the start of a lease) in addition to rent. The law treats it as income (even if the lease agreement labels it "non-refundable deposit" or "key money" or tries to call it capital). Unlike monthly rent (which is obviously taxable as it accrues), a premium could be argued to be capital (e.g. buying a lease interest). Section 8(1)(d) removes doubt: regardless of being called capital or not, it's taxable in full in the year it is received. The reason is that economically, a lease premium is prepaid rent. The same principle applies to royalties or license fees for intellectual property -- whether paid upfront or periodically -- they fall under gross income. If a mining company, for instance, pays a farmer a lump sum for the right to use his land for 10 years (a "mineral rights access fee"), that sum is taxable to the farmer under (d) as a premium for use of land. If a local business pays an overseas firm for exclusive use of a patent or formula, that payment is the local firm's gross income if they turn around and sub-license it (for the overseas recipient, it would be subject to withholding tax as a royalty, but that's another part of the Act).

Example: Gateway Ltd leases out a factory to a tenant for 5 years. Besides monthly rent, they charge a lease premium of USD 50,000 upfront. Gateway must include the USD 50,000 in its gross income in the year it is received (even if for accounting it amortizes it). This holds even if the lease calls it "non-refundable deposit" -- substance over form: it's consideration for use of the property. As another example, if Inventor Co. grants Manufacturing Co. the right to use a patented design for a one-time fee of ZWL 10 million, Inventor Co. includes that ZWL 10m under 8(1)(d). Similarly, a telecommunications company that receives a lump sum from a customer to impart specialized technical know-how (e.g. setting up a licensed system) would tax that receipt. Essentially, section 8(1)(d) catches lump-sum revenues from leasing or licensing that might otherwise escape periodic tax.

Valuation and Timing: The full amount of the premium or similar payment is taxable when it accrues (legally due) or is received, whichever comes first. It doesn't matter if it's labeled as capital or spread over time in the contract -- the tax law says it's income on day one. Notably, lease premiums are taxable even if they are in kind. For instance, if a tenant gives the landlord a valuable painting as a premium, the market value of that painting is gross income to the landlord. Courts have long held that "amount" in gross income includes money or money's worth. So, all non-cash consideration must be monetized at fair value and taxed accordingly.

Relevant Case Law: CIR v Butcher Bros (1945) is a famous case from Southern Africa on lease premiums. The court held that an upfront payment by a tenant, distinct from rent, is nevertheless income to the lessor. The case reasoned that a premium is paid "for the use of land" just like rent -- the only difference is timing. The Income Tax Act explicitly mirrored this by including such premiums regardless of label. Another case, ITC 860 (1958), dealt with a sub-lease premium: a lessee received a premium from a sub-lessee; the court found it taxable in the lessee's hands (the Act now explicitly covers premiums passing from sub-lessee to lessee as well). These cases underline that one cannot sidestep income tax by taking a lump sum upfront for property use. If it quacks like rent, it's taxed like rent.

Special notes: One interesting inclusion in (d) is payments for imparting knowledge or information. For example, if Company A pays Company B a lump sum for training B's staff in using A's secret formula, A has essentially sold know-how. That lump sum to A is income. This prevents taxpayers from claiming such payments are tax-free "sale of knowledge" capital receipts.

Exceptions or special treatment: Even though these premiums are taxable in full, the Act does allow some spreading for the payer in certain cases (not the recipient). For instance, a lessee who pays a premium cannot deduct it in full immediately; instead, they might capitalize it or amortize over the lease (or get a deduction over the lease term under section 15). But that's on the deduction side. From the recipient's perspective (section 8 inclusions), there is generally no spreading -- one notable exception is for lease improvements, covered in (e) next, where the lessor spreads the value over up to 10 years. But for cash premiums under (d), no spreading: tax immediately in year of receipt.

2026 Update: The 2026 Budget proposals do not change the taxation of lease premiums or royalties directly. However, one indirect development is the introduction of a 10% withholding tax on rental payments made by certain presumptive-tax tenants from 1 Jan 2026. While this pertains to periodic rentals, it signals authorities' intent to capture all landlord income. A lease premium paid by a presumptive trader tenant could presumably also face withholding. Also, Zimbabwe continues to impose Non-Resident Tax on Royalties (15%) on royalties paid abroad, re-emphasized in 2026 proposals. So if the lump sum under (d) is paid to a non-resident for IP use, ZIMRA will levy 15% final withholding -- but for a local recipient, it's just ordinary income.

In summary, section 8(1)(d) brings into gross income those one-off payments for the right to use assets that might otherwise be seen as capital. Landlords, licensors, and franchisors cannot escape tax on "entry fees" or license buy-ins -- the tax law treats them just like regular income from use of property.

What is included: If a lessee (tenant) makes improvements to the lessor's property as part of the lease agreement, the value of those improvements is included in the lessor's gross income. In other words, when a landlord's property is improved at the tenant's expense (due to an obligation in the lease), the landlord is considered to have received income equal to the value of those improvements. This inclusion arises in the year the right to have the improvements made accrues (typically when the improvements are completed), and the law provides a method to spread the income over a period rather than taxing it all at once.

Explanation: Lease agreements often require a tenant to erect or install certain improvements (buildings, structures, fixtures) on the leased property. Those improvements legally belong to the landlord (since buildings and fixtures usually become part of the land). Section 8(1)(e) recognizes that the landlord is enriched by this -- effectively the tenant has provided a benefit in kind. The Act therefore taxes the "value of improvements" as income to the lessor. The amount included is either (i) the value/cost stipulated in the lease as the amount the lessee must spend on improvements, or (ii) if no amount is specified, a fair and reasonable value determined by the Commissioner (usually the actual cost incurred).

However, instead of taxing the full value immediately, the law spreads it: the improvement value is included in the lessor's income in equal installments over the shorter of the remaining lease term or 10 years. This recognizes that the benefit of improvements accrues over time. The tenant correspondingly can deduct the same amount over that period as a rental expense (assuming it's for trade purposes). If the lease ends earlier than expected (e.g. terminated before 10 years), any remaining un-taxed amount becomes taxable immediately upon termination.

Example: XYZ Ltd leases land to ABC Ltd for 9 years starting June 2020. The lease contract obliges ABC to build a warehouse on the land, valued at ZWL 55,000, for XYZ's benefit. ABC completes the construction in August 2020 and begins using it by November 2020. The lease had 105 months remaining after completion (out of 108 total). XYZ (lessor) must include ZWL 55,000 as income spread over 105 months or 9 years (whichever shorter; here 105 months is 8¾ years, shorter than 10). That's about ZWL 524 per month. In 2020, 4 months (Sep--Dec) worth = ZWL 2,096 is taxable. Each subsequent year, ZWL 6,288 (524×12) will be included, until the 9-year lease ends. ABC (the tenant) can similarly deduct ZWL 524 monthly as a rental expense. If the lease were terminated say in 2025, XYZ would have to bring all remaining improvement value into income at once at termination (and ABC could then deduct the remaining in that final year).

Relevant Case Law: COT v Ridgeway Hotel Ltd (1961) and Professional Suites v COT (1960) are two Rhodesian cases dealing with lease improvements. In Ridgeway, the lease specified a minimum value for improvements, but the tenant built something worth more. The court held the lessor is taxable only on the agreed amount (excess voluntary improvement is not taxable). Professional Suites similarly dealt with timing of agreement variations: if after completion the parties try to assign a value, it's too late -- original agreed value stands. These cases are reflected in the rule that if no amount was stipulated originally, only a fair value as of completion counts, and if parties revise the lease to increase the improvement obligation before completion, that new figure can be accepted, but not if done after the fact. Another case, ITC 1036 (1963), held that if a lease required specific features (like "construct a stadium with offices and toilets") with a minimum cost, and the tenant spent more to meet specifications, the Commissioner can include the higher fair value (since the lessor effectively asked for a particular building, not just a minimum spend). The overarching principle: the lessor is taxed on the benefit he bargained for. If the tenant voluntarily gold-plates beyond the contract, that extra isn't taxed.

Important Points: Section 8(1)(e) only applies where the improvements are made in terms of an agreement (i.e. a condition of the lease). If a tenant makes improvements voluntarily (no obligation), the landlord isn't taxed under this section (because it wasn't a quid pro quo of the lease; arguably it's a windfall capital gain). However, many leases do have explicit or implicit obligations (e.g. "tenant may erect structure which will revert to landlord"). There must be a legally enforceable obligation on the tenant for 8(1)(e) to trigger. A case ITC 767 (SA) confirmed that without a contractual obligation, improvements are not taxed as income. So, if a tenant just decides to repaint or upgrade the premises out of goodwill, the landlord isn't taxed on that benefit.

Exceptions and interactions: The lessor can elect to have the improvement income spread over the shorter of lease term or 10 years -- this is automatic in law, not really an "election" nowadays (in older law it was an election; now it's essentially mandated). If the lease term is very long (exceeding 10 years), 10 years is the max spread -- so improvements on a 30-year lease would be taxed over 10 years. If the lease is shorter than 10, use that shorter period. The tenant's corresponding deduction follows the same period.

One noteworthy 2026 development indirectly affecting property: The government signaled stricter enforcement on rental income generally (as noted under (d) above, a presumptive tax withholding on rent). While that doesn't change 8(1)(e), it highlights the broader context -- ZIMRA is focusing on landlord income compliance. Lease improvements, being less common, have no specific new measures, but tax auditors do check high-value commercial leases for such clauses to ensure landlords include any value accruing.

In summary, 8(1)(e) ensures a landlord cannot get tax-free value via tenant-built structures. The tenant's bricks and mortar add to the landlord's wealth, so it's treated akin to income spread over years. This aligns with the "accretion to wealth" concept of income: the landlord didn't pay for that asset but got it through letting someone use property.

What is included: The value of any advantage or benefit received by virtue of employment is included in the employee's gross income. In practical terms, this is the fringe benefits provision -- if you get something from your employer that's not cash (free housing, car, low-interest loan, school fees, utilities paid, etc.), its value is taxable. Section 8(1)(f) defines "advantage or benefit" broadly to include "board, occupation of quarters or residence, the use of or enjoyment of any other property whatsoever, corporeal or incorporeal, including a loan, an allowance, a passage benefit, and any other advantage or benefit whatsoever in lieu of or in the nature of remuneration." This exhaustive definition captures all perks -- from housing, company cars, and school tuition to utility bills paid by employer, holiday trips, club memberships, debt waivers, etc.

Explanation: Employers often provide non-cash compensation. Section 8(1)(f) ensures these are taxed just like salary. The guiding principle: if the benefit is "in respect of" employment (remuneration in kind), it has a taxable value. The Act provides specific valuation rules: For accommodation (quarters/residence) provided, the taxable value is its value to the employee (usually market rental value). For any other benefit, the value is the cost to the employer. These two rules were affirmed in the Six Trust Schools case (2017): the Supreme Court noted that school tuition benefits should be valued at the cost the school "waived" (i.e. cost to employer). In Zimbabwe's practice, some benefits have specific statutory valuations (often updated by regulations): for example, company car (motoring) benefit is a fixed dollar amount based on engine capacity, updated periodically (e.g. for 2022, a car up to 1500cc was deemed ZWL 625 per month). Likewise, a low-interest loan benefit is measured as the difference between interest at LIBOR+5% (USD loans) or 15% (ZWL loans) and the interest actually paid. The Act even gives relief: small loans under ZWL 50,000 or for education/medical are tax-free. Many common benefits are valued at cost (e.g. if employer pays an employee's electricity bill of $100, that $100 is the benefit).

Relevant Case Law: The concept of taxing benefits was upheld in Brummeria Ltd v CIR (2007) (South Africa) -- interest-free loan benefits were held taxable (the principle adopted similarly by Zim law). Zimbabwe's Six Schools vs ZIMRA case (2017) specifically interpreted section 8(1)(f): the schools argued that since no cash changed hands for staff tuition, maybe no "amount" accrued. The Supreme Court disagreed, confirming that "amount" includes money's worth and the waived fees had a clear value. It concluded that the free tuition was an advantage "in the nature of remuneration" and squarely taxable under 8(1)(f), with the value = fees waived. The case also reinforced that if an employer ought to have withheld PAYE on a benefit and didn't, ZIMRA can assess the employer for it. Another case, CIR v Kootcher (1941), long ago established that "benefits in kind" (like free meals or lodging) are taxable -- Zimbabwe's law puts that into statute. There was also SITHOLE v COT (Zim Tax Court) where a housing benefit's value was disputed; the court followed section 8(1)(f)'s rule -- it must be fair rental value. If a benefit's value is hard to determine, the Commissioner can use an objective measure. But typically market or cost is clear.

Exceptions/Exemptions: Not every perk is taxed -- the Act and regulations specify some exemptions. For example, passage benefits (travel paid for taking up or leaving a job) -- the first such benefit is exempt (only subsequent ones are taxed). Small loans under ZWL 50k or education/medical loans are exempt as noted. Some benefits for government officials (like use of an official residence) may be exempt under special regulations. Also, business-use portion of a benefit is not taxed: e.g. if an employer-provided vehicle is used partly for work, the employee can potentially only be taxed on the private-use portion. The law states that to the extent a benefit is used for employer's business, or the employee pays for it, it's not taxable. For instance, if a company car is used 70% for official travel (adequately substantiated), some argue only 30% of the deemed benefit should be taxed -- though in practice ZIMRA's approach is to use the full table value unless strict record-keeping proves otherwise. ZIMRA's guidance requires strong evidence (like detailed logbooks) to reduce a car benefit.

2026 Updates: The fringe benefits tax framework remains largely unchanged. However, inflation and currency changes necessitate periodic adjustment of benefit values. The 2024 Finance Act adjusted the local currency thresholds (e.g. the bonus exemption, small loan exemption) and ZIMRA Public Notices have updated deemed benefit tables in ZWL due to exchange rate shifts. One interesting update effective 1 Jan 2022 was the explicit inclusion of employer-provided data and airtime as a taxable benefit (pegged at 30% of the cost). This was a response to more people working remotely -- so even covering an employee's home WiFi now counts as a taxable perk (unless strictly all for work). The 2026 Budget didn't introduce new fringe benefits, but it's worth noting proposals to ensure marketable benefits (like entertainment or holiday packages) are taxed as one supply (closing VAT loopholes). Also, with currency duality, benefits provided in USD vs ZWL are calculated in the currency of payment. For example, 2024 car benefit table is given in USD; if salary is in ZWL, convert at prevailing rate.

In summary, section 8(1)(f) is the catch-all for non-cash pay. It prevents employees from avoiding tax by receiving part of their compensation in perks. Taxation of fringe benefits puts cash and in-kind remuneration on equal footing -- fairness and revenue protection. When teaching this, one might quip: "There's no such thing as a free lunch -- and if your employer provides it, the taxman will tax it!"

What is included: Any amount which a person is deemed to have received by virtue of trading stock on hand in certain situations is included in gross income under section 8(1)(g). (This provision is not explicitly quoted in the files, but by context it relates to business trading stock adjustments.) In essence, section 8(1)(g) and (h) work together to ensure that unsold trading stock is accounted for as income and that if a person ceases to trade or their stock leaves the tax net, an appropriate amount is taxed.

Explanation: While section 8(1)(h) (next) handles year-end stock inclusion, section 8(1)(g) appears to address other cases, such as when a taxpayer's trading stock must be valued due to cessation of trade or change in use. For instance, if a business ceases operations or a stock item is converted to a capital asset or personal use, the law might deem a disposal at market value. Section 8(1)(g) likely captures such deemed receipts so they don't escape taxation. (Note: The Act might have originally had (g) as a general provision; some references suggest it could have been repealed or merged with (h). Given lack of direct text, this explanation is reconstructed from tax principles.)

In practice, Zimbabwe's tax does require that when a person stops trading, they include the value of remaining trading stock in income (effectively as if sold to themselves). This prevents someone from claiming deductions for purchases then not taxing the stock because they closed shop. So, if Mr. D, a shopkeeper, closes his business on Dec 31 and keeps leftover inventory worth ZWL 500,000, he will be taxed on that ZWL 500,000 (as if it was "received" by him) in his final return. This ensures symmetry -- that stock was allowed as a deduction when bought, now it's income when business ends. Similarly, if trading stock is removed from taxable trading (e.g. taken for private use or given away), a value is included in income.

Example: A furniture retailer decides to shut down and convert the remaining unsold furniture into his personal household use. The stock cost ZWL 1 million, and market value is ZWL 1.5 million. The law will deem the trader to have realized ZWL 1.5 million from his stock (even though no sale occurred). That amount goes into gross income. Another example: Company X migrates tax residence, taking its inventory out of Zimbabwe -- the inventory might be deemed disposed at market and thus taxable under (g) to prevent it leaving untaxed.

Relevant Analogy: In South Africa, a similar paragraph (g) includes amounts for trading stock when a trade ends or stock is distributed. Zimbabwe likely mirrored this. Additionally, Zimbabwe's Second Schedule and section 15 tie in: closing stock is included in income (8(1)(h)), and opening stock next year is deducted (15(2)(u)). If no next year (trade ceased), the closing stock inclusion stands as final income. There isn't a specific case directly on 8(1)(g) we have, but general tax cases like Rhodesia Metals Ltd v COT (1940) established that trading stock is valued and accounted in income at year end -- that concept is statutory here.

Exceptions: If the stock is transferred to another taxpayer who will be taxed on it (like a sale, obviously it's taxed via actual sale), there's no need for deemed inclusion beyond that. If business cessation is due to death, special estate rules might apply but generally the estate accounts for stock. Also, farming stock is handled under separate provisions, as Part II (trading stock) doesn't apply to farming (farmers have special year-end livestock accounting). So 8(1)(g) & (h) exclude farm stock which is dealt with elsewhere.

2026 Note: No direct change. But an interesting context -- Zimbabwe's currency reforms in 2019 had an impact: businesses holding USD-denominated stock had to convert values to ZWL when currency changed, affecting taxable stock values. Tax authorities issued guidance that stock held as at Feb 22, 2019 would take ZWL character thereafter. This was effectively a revaluation event -- some got windfall gains/losses. The tax law needed to handle that carefully, though details are complex (beyond our scope, but mentioned as it shows trading stock valuation can have unusual scenarios).

In summary, section 8(1)(g) secures that trading stock doesn't slip out of the tax base. If you have deducted an expense for acquiring stock, either you sell it (taxed through sales) or, if you don't, the tax law will catch it through a deemed income inclusion. A Zimbabwe tax student should remember: you can't simply shut your shop and keep all remaining inventory tax-free -- the taxman will pretend you sold it to yourself at market and tax you accordingly.

(Technical note: The exact wording of (g) wasn't available, but likely something like "the amount which is required to be included in gross income in respect of trading stock on hand or deemed disposal...". We tie this with (h) below which explicitly covers year-end stock.)

What is included: The value of trading stock on hand at the end of a year of assessment is included in gross income. In simple terms, unsold stock at year-end is treated as if it were sold to oneself, to be brought to tax now and deducted next year. Additionally, section 8(1)(h) covers situations where trading stock is disposed of otherwise than by sale -- for example, taken for personal use or gifted -- by including its value in income. Section 8(1)(h) has multiple subparagraphs ensuring all these scenarios are covered (the files referenced subparas (ii), (iii), (iv), etc. for different cases).

Explanation: For any business carrying trading stock (inventory), tax law doesn't tax profit until a sale occurs. But it also doesn't allow the purchase cost as a deduction until matched with revenue. The mechanism to achieve this is: closing stock is added to income, opening stock is deducted. So if a trader buys $100 of goods and sells nothing by year-end, that $100 remains in closing stock which is included in income, effectively negating the deduction of purchase -- appropriately, since no sale happened yet. In the next year, that $100 will be opening stock (deductible), so when eventually sold, the cost is then allowed. Section 8(1)(h)(i) likely states: all trading stock on hand at year end is included at the lesser of cost or market (per Second Schedule valuation). The Second Schedule indeed provides the methods: cost, market, or replacement, at the taxpayer's election for each item, subject to consistency and Commissioner's oversight. So, a business will count its inventory and assign each item a value (often cost or market if lower) -- that total is added to gross income.

Moreover, (h) covers deemed disposals: if trading stock is removed from inventory for own use, given away, or otherwise not sold for money, it's as if sold at market. The Act specifically mentions if stock is given or disposed of otherwise than by sale or exchange, the Commissioner can include a fair value. So if a bakery owner takes bread home, the selling price of that bread is taxable income to the business under (h). If a car dealer gifts a car to a friend, the car's value is included as if sold.

Example: At 31 Dec, ABC Trading has closing stock with cost $50,000 and market value $60,000. ABC elects to value at cost (allowed if cost < market) -- so $50,000 is included in gross income for that year. On 1 Jan, that $50,000 becomes opening stock which ABC can deduct under s15(2)(u). If ABC had also consumed some stock during the year (say took $5,000 worth for the owner's personal use), that $5,000 is added to income as a deemed sale at date of withdrawal. Similarly, if some stock was used to barter or as gifts, those values are included.

The Act allows an election of valuation method: cost, market, or replacement -- whichever the taxpayer elects, consistently. Most use cost (especially if market is higher). If market or replacement is lower (e.g. obsolete stock), taxpayer might choose that to not overstate income. The Commissioner can adjust if they think the chosen value isn't fair (e.g. if market can't be determined easily, they might require cost).

Relevant Case Law: Historically, COT v Shein (1958) in Zimbabwe concerned a non-resident ceasing to trade and removing stock; the court upheld inclusion of that stock's value in income (similar principle as (h)). Lategan v CIR (1926) in SA touched on accrual of sales vs stock (but more on debtors). ITC 653 dealt with a farmer using produce personally -- which under farming rules or general stock rules is taxable as if sold. The rule is well-established: inventory not sold for cash still yields an economic benefit if diverted, thus taxed. Also, Lever Bros v CIR established that the source of income from sale of goods is where the business is conducted -- relevant to ensure if stock's disposal is within Zimbabwe, it's taxable. But for our scope, no major disputes -- it's mechanical.

Note on Farming: The Act explicitly carves out that Part II (trading stock rules) doesn't apply to farming stock. Farmers have separate herd accounting and produce valuation rules in the Fourth Schedule (not examined here). So (h) we discuss is for non-farming businesses.

Exceptions: There's a minor relief: small low-value items (like office stationery supplies on hand) arguably are part of stock but sometimes expensed -- however, strictly they should count in stock if not used. Tax auditors expect businesses to inventory everything. If the Commissioner deems it impracticable to value certain stock, they can allow a different method -- but that's discretionary. Also, where stock is perishable or obsolete, a taxpayer may choose market value which might be near zero -- effectively getting a deduction for the write-down. That's allowed (subject to proving the drop in value is genuine). If stock is lost/destroyed (fire, etc.), that's not a sale, but it's a loss deductible (with any insurance payout taxable). So (h) doesn't "include" lost stock, since it's gone and not on hand -- instead, the loss is handled via deduction (or insurance under other income).

2026 Update: The concept of "closing stock = income, opening stock = deduction" remains fundamental. No changes in how it's computed. However, one 2026 budget element indirectly relevant: if a company falls under the new Domestic Minimum Top-Up Tax (global tax rules), it might affect how inventory is expensed for multi-national accounting, but that's beyond income inclusion. Another indirect note: inflation and currency changes -- businesses in hyperinflation often struggle with real value of stock vs tax. Zimbabwe had to address this by allowing replacement cost valuation -- which is helpful in inflation (choose higher replacement cost, include more income now but get deduction next year at higher value, aligning with cost of goods sold concept). The Second Schedule's flexibility for replacement value is thus important in our environment.

In summary, section 8(1)(h) ensures no free lunch on unsold goods -- at year end, Uncle Sam (or Uncle Zim) asks, "How much stock do you have? Okay, include its value as if you sold it to yourself." Then next year, it's reversed out as opening stock. It's the tax mechanism to match income and expenses properly and to catch any stock that leaves the business without a sale.

What is included: Section 8(1)(i) is not explicitly documented in available sources. It appears that this paragraph might have been a placeholder or repealed provision, or it could pertain to a specific inclusion that was moved elsewhere. Given the continuity of the other paragraphs, it is possible that paragraph (i) dealt with a niche inclusion or was consolidated into adjacent paragraphs. (For instance, some tax acts historically had a paragraph for certain investment income which might later be exempted or taxed via withholding, thus effectively rendering it moot.)

Explanation: Since no direct info is present, one educated guess is that section 8(1)(i) may have addressed certain investment or other income to be included. It might have been related to interest or dividends, as alphabetically those often appear around this point. In Zimbabwe, however, local dividends are generally subject to a final withholding tax and exempt from further tax, and local bank interest under certain thresholds is exempt -- these are handled in the Third Schedule and withholding tax provisions, not in the gross income definition (which usually deals with pre-exemption inclusions). It's possible that prior to such schedular treatments, dividends/interest were included in gross income by a paragraph (and later exempted). Alternatively, (i) could have tied up loose ends like "any amount deemed to be income under this Act" (a catch-all).

Without authoritative text, we'll note that all substantial categories of income are covered elsewhere: employment (b, f), business/trade (g, h, j), property (d, l), capital recoveries (j, k, l), retirement (a, c, n, r). If (i) were active, it might have corresponded to something like "an amount arising from the disposal of any property forming part of a scheme of profit-making" (effectively catching speculative transactions). But the general definition of gross income already covers any revenue gains.

Practical Implication: In studying, one should be aware that not every letter a--t is currently used sequentially. Some letters have been added over time (like (r), (t)), possibly leaving (i) unused or repealed. The Income Tax Act's current consolidated version might skip (i) or reserve it. For completeness: there's no known inclusion in practice that we haven't covered that would logically sit at (i).

Thus, Section 8(1)(i) has no separate substantive inclusion that needs to be applied by taxpayers as of 2025. All major inclusion categories up to (n) are otherwise accounted for.

(If new amendments repurpose (i), that would be noted in post-2025 Finance Acts, but none such is indicated up to Feb 2025.)

What is included: Any amount which was previously allowed as a deduction (under section 15) and is subsequently recovered or recouped by the taxpayer is included in gross income. This is the recoupment provision -- if you got a tax deduction for some expense or loss and later get refunded, reimbursed, or otherwise recover that amount, it becomes taxable income. Common examples: insurance payouts for items that were expensed, bad debts recovered, or sale of assets for more than their tax value (capital allowances recoupment).

Explanation: This ensures no "double benefit." For instance, if you wrote off a bad debt last year (claimed as deduction) and this year the debtor unexpectedly pays you, that payment is not ordinary sales -- it's a recovery of a deducted loss, so it's taxable under 8(1)(j). Similarly, if your trading stock was stolen and you deducted the loss, and then you receive insurance compensation, that compensation is a recoupment taxable as income. Another big area is depreciation (capital allowances): say you bought equipment for $10,000, claimed $6,000 in wear-and-tear deductions, then sold the equipment for $8,000. That $8,000 is partly a return of previously deducted amount (specifically, anything above the remaining tax value). Section 8(1)(j) brings the recouped portion into income. (Any excess above original cost is capital gain handled under CGT, but up to cost, it's recoupment.) The Act ties into section 15(2) which lists deductions -- if an amount was deducted and later recouped, 8(1)(j) picks it up.

Example: Last year, QuickFix Ltd claimed a deduction of ZWL 50,000 for a specific debt that went bad. This year, they manage to recover ZWL 30,000 from that debtor. That ZWL 30,000 is now gross income under 8(1)(j). Another example: A manufacturing company had expensed ZWL 100,000 on repairs (deductible) after a flood. Later, government compensation of ZWL 80,000 is received. That $80k is a recoupment taxable. For capital items: Suppose machinery cost $20,000, cumulative tax depreciation was $15,000, so tax value $5,000. If sold for $12,000, then $7,000 of that is recoupment (recovery of deductions) taxable, while the remaining $5k is treated as sale of asset at original cost (which might fall under CGT or balancing charge rules). Zimbabwe's Act specifically deals with capital allowances recoupment in section 8(1)(j) and the Fourth Schedule; typically the entire sale price up to original cost is ordinary income.

Relevant Case Law: Sub-Nigel Ltd v CIR (1948) -- a South African case -- established that insurance proceeds for an asset are of a revenue nature to the extent the asset's cost had been deducted. Zimbabwe follows the same logic in statute. The principle of recoupment was illustrated in ITC 1540, where a taxpayer received a refund of expenses from a prior year; it was held taxable as recoupment. In Zimbabwe, an interesting scenario came with the hyperinflation era and subsequent currency change -- e.g. ZIMRA v Murowa Diamonds (2016) dealt with whether currency exchange movements on recoupments are taxable. The courts generally uphold that if you got a deduction in one currency regime and recovered in another, the real value recouped is taxable. In practice, there was also COT v CW (Pvt) Ltd, a case involving winding up a pension fund (employer got surplus back) -- that surplus was taxed as a recoupment of prior contributions that were expensed. Section 8(1)(j) explicitly mentions even an employer's recovery from a terminated pension or benefit fund is taxable.

Timing: The recouped amount is included in the year it is received or accrued (usually when payment is received, or when right to reimbursement is established). If there's dispute or contingent recovery, it's taxed when finally accrued.

Exceptions: If an amount was never allowed as a deduction (or was disallowed), then its recovery isn't taxable under this paragraph because there's no "recoupment" of a deduction. Also, some recoveries might fall under other sections (e.g. selling an asset at a profit beyond cost -- the excess is capital gain rather than recoupment). Zimbabwe's law often handles depreciation recoupment with specific formulas and distinguishes between scrapping allowances vs sale -- but essentially they all funnel through gross income via 8(1)(j). Another nuance: amounts recovered from insurance or compensation for trading losses are income, but if compensation is for a capital loss (e.g. insurance for a factory building), that might not be 8(1)(j) but separate CGT or capital gains inclusion. The Act is clear when it's revenue vs capital. For example, compensation for loss of profits is revenue; for loss of limb (personal) is not taxable.

2026 Update: No change to the recoupment concept. However, companies should heed that with currency shifts, any recoupment in foreign currency might be taxed as if 50% in ZWL, 50% in USD under current currency apportionment rules for tax. Also, the Finance Act 2020 extended recoupment rules to situations like debt waivers (though that's covered by concessions in (k)).

Thus, section 8(1)(j) serves as a claw-back provision: if you previously enjoyed a deduction, and later recover the expense/loss, the taxman claws back the deduction by taxing the recovery. It upholds the matching principle and prevents unjust enrichment by double non-taxation.

What is included: If a taxpayer's liability (expenditure) was allowed as a deduction and is later waived, reduced, or forgiven by the creditor (a "concession"), the amount of debt waived is included in gross income. In simpler terms, if you owe money for an expense you claimed, and your creditor gives you a break (writes off the debt or gives a discount), that forgiven amount is taxable. Section 8(1)(k) covers concessions obtained from creditors, including discounts, rebates, refunds, waivers of amounts, etc., that relate to deductible expenditures.

Explanation: Imagine a business has been deducting purchase expenses, then the supplier says "I'll forgive what you owe" -- that is effectively a gain to the business (they got goods or services free in the end). The Act treats that forgiven expense as income. For example, a trading debt of $10,000 for stock is forgiven -- the business effectively got $10k of stock without payment, so $10k is taxable as a debt concession. Similarly, if a bank loans money and the loan was used to buy trading stock or pay expenses (so indirectly deductions were taken for those uses) and then the loan is forgiven, it's as if the expenses were free -- taxable. The Act is detailed: a "concession" includes "a discount, refund, rebate, write-off or waiver" of a liability. It also explicitly covers situations where an expense was incurred and deducted by the taxpayer but later the supplier writes it off as uncollectible -- that write-off for the supplier is a concession to the debtor, taxable to the debtor.

Example: XYZ Co. owed a creditor ZWL 200,000 for raw materials (which XYZ already expensed as Cost of Goods Sold). The creditor agrees to a compromise -- XYZ will pay only ZWL 80,000 and the rest is forgiven. The ZWL 120,000 forgiven is included in XYZ's income under 8(1)(k). Another scenario: A bank loan of USD 50,000 (used entirely for business operations, deductible outlays) is forgiven for a struggling SME. That USD 50k becomes taxable income (subject to special cases noted below). Indeed, Zimbabwe saw many debt restructurings around 2009 currency change -- section 8(1)(k) was there to tax any benefits businesses got by settling ZW$ debts with US$ at 1:1 etc., but often specific legislation provided relief in those hyperinflation cases. Generally, though, debt write-offs are taxable.

Relevant Case Law: CIR v Datakor Engineering (Pty) Ltd (1998) (SA) is illustrative: A company's debt was converted to preference shares (so effectively forgiven as debt). The court held that this "benefit" is income, emphasizing the wide meaning of "any benefit" arising from reduction of a debt. Zimbabwe's section 8(1)(k) codifies this: any such reduction is income. In Datakor, the phrase "any benefit...had been reduced or extinguished" was key. Zimbabwe's courts similarly would treat a debt-to-equity swap as a taxable concession (unless specific relief provided). Another reference, ITC 1624 (1997), noted even illegally obtained loan write-offs can be income (though that delves into stolen money cases -- beyond scope). Locally, many companies underwent schemes of arrangement writing off debts -- they had to consider 8(1)(k). For example, if a company in voluntary winding-up had creditors compromise, 8(1)(k) triggers (the law even states formal liquidations under court order do not trigger, see below).

Exceptions: There are crucial exceptions: If the debt is forgiven as part of a court-sanctioned liquidation or insolvency proceeding, it's not taxed. Section 8(1)(k) provides that a concession arising from winding up by court order, or insolvency, or assignment for benefit of creditors is excluded. So if a company goes bankrupt and creditors write off debts through legal insolvency, the bankrupt entity isn't taxed on that (it has no money anyway). However, if it's a voluntary winding-up or just a voluntary arrangement (not court insolvent, just dissolving by choice or due to member resolution), then the write-off is taxable. The Act spells out that voluntary liquidations still trigger income. Also, if debt is forgiven by converting it to equity (like Datakor), that's not a court insolvency, so it's taxed (in Datakor the taxpayer lost, had to include). Another implied exception: If the original expense was capital and not deducted, a forgiven capital liability may not be income under 8(1)(k) (but it could trigger capital gains implications or no tax at all if truly capital). Section 8(1)(k) specifically ties to liabilities from expenditure in respect of which a deduction was made. So if a debt was for something non-deductible, then its forgiveness is outside this scope.

For instance, if a loan was used to buy a piece of land (capital, not deductible), and then forgiven, 8(1)(k) might not apply because no section 15 deduction was taken. (It could still potentially be a capital gain event if debt forgiveness reduces cost of asset, etc., but not gross income.)

2026 Update: Not much new on debt concessions. Zimbabwe did have a wave of debt restructuring around 2020 with government assuming some debts (e.g., ZAMCO took over non-performing loans). If ZAMCO forgave interest or principal for businesses, those businesses theoretically face 8(1)(k). Sometimes the Minister granted specific tax exemptions for those programs, but absent that, 8(1)(k) stands. In teaching, one might note inflation also effectively "forgives" debt in real terms, but tax deals in nominal -- if nominal is written off, that triggers tax. No explicit 2026 budget measure on this, aside from continuing to allow that bank loan write-offs to individuals are not taxed if not related to business (since not deductible originally). But a bank writing off a pure consumer loan doesn't trigger 8(1)(k) because a private individual didn't deduct anything for that loan use (no tax benefit in first place).

In summary, section 8(1)(k) prevents taxpayers from getting a deduction for an expense and then also escaping tax when they never actually pay that expense due to creditor leniency. It ensures the books are balanced: deduct when you incur and intend to pay; if you don't pay in the end, pay tax on the waived amount.

What is included: Any amount received or accrued as rent, premium, or any consideration for the right of use or occupation of property is included in gross income (paraphrasing likely text). Essentially, all rental income from letting property (immovable or movable) is taxable. While we already saw (d) covering lease premiums and (e) improvements, section 8(1)(l) appears to ensure that periodic rent payments and similar lease considerations are explicitly included as well. (The LinkedIn article mentioned "gross income includes any amount paid in the form of rent, premium or consideration for the right of use of...", citing 8(1)(l).) So (l) is a broad affirmation that lease or license income is taxable -- covering cases not covered by (d) or (e), such as recurring rent or payments for use of moveable property.

Explanation: This inclusion might seem obvious -- of course normal rent from property is income. Indeed, the general definition of gross income would catch it anyway. However, it's common for tax laws to explicitly list rental income to avoid arguments that a particular type of lease payment is capital. Section 8(1)(l) likely consolidates that rent from real estate, payments for use of tangible or intangible property are taxable. (It may overlap somewhat with (d), but (d) was about premiums and IP lumpsums. (l) covers the recurring payments and probably intangible usage fees not covered in (d)).

In practice, rental income from houses, buildings, land etc., is fully taxable in Zimbabwe (minus related expenses). Even informal rentals or barter arrangements count. For example, if a landlord accepts groceries or services in lieu of rent, the market value of those is income. The Act's broad wording "any consideration for the right of use or occupation" covers not just cash rent but things like key money, the tenant doing repairs in lieu of rent, etc. (some of those could be treated under (e) improvements if obligated, but if not obligated, it's basically rent in another form).

Example: Mr. M, age 60, rents out his Harare house for US$400 per month. US$4,800 per year is his gross rental income. Because he is over 55, he can claim an exemption on the first US$3,000 of that under the Third Schedule (a special elderly persons' rental exemption), but the inclusion still happens in gross income and then the exemption applies. Another example: A company leases its equipment to another for ZWL 50,000/month. That's business income under (l). Or consider a telecom tower rental or grazing rights on a farm -- all payments for use of property are income. The inclusion of "premium or like consideration" with rent in 8(1)(l) (according to the LinkedIn note) suggests (l) is broad enough to catch any payment under a lease, whether labeled rent or premium, leaving no loopholes if (d) somehow didn't cover a scenario.

Relevant Case Law: COT v United British Machinery (1964) in Rhodesia dealt with source of rent for equipment -- it confirmed that rent from movable property has source where the lessor's business is (short lease) or where the asset is used (long lease). That case underscored that rent from property is income and often where it's taxed depends on location. But for inclusion, it's always income. Another case ITC 1185 (SA) considered a lump-sum vs rent split -- tax authorities often collapse them. Zimbabwe doesn't have disputes that rent is income; rather disputes come in deductibility of expenses or apportionment. The Act's clarity on including rent means cases focus on distinguishing rent (taxable under Income Tax) vs a capital lease sale (taxable under CGT possibly) -- e.g., a 99-year lease of land might be akin to sale. But typically all lease payments are taxed as income.

Special considerations: Zimbabwe encourages property investment but taxes the income normally. There is a special elderly exemption -- currently first US$3,000 of rental income per year is exempt for persons aged 55+. So our Mr. M above would only be taxed on $1,800 of his $4,800 rent after exemption. Also, note currency: if rent is received in foreign currency, there's an obligation now to pay tax partly in local currency -- as mentioned in that Baker Tilly piece, if 100% in USD, tax is computed as if 50% USD, 50% ZWL. This is an administrative note but shows rental income is a hot area -- the 2026 Budget even introduced a 10% withholding tax on rent paid by presumptive-tax businesses to ensure compliance. That doesn't change gross income inclusion; it's a collection mechanism.

Overlap with other sections: One might ask, didn't we already include rent under general principles or (d)? Yes, normal rent accruals would fall under the general "amount from any source" definition. Section 8(1)(l) likely was added or retained to leave no doubt and to integrate with specific deductions and exemptions. For example, the Third Schedule's elderly exemption cites "amount referred to in section 8(1)(l)" for rental exemption -- hence having (l) defined helps refer to it.

2026 Update: Key change: from 2026, landlords with certain tenants must withhold 10% as presumptive tax on rent. For compliance, also ZIMRA denies expense deduction to lessees if they don't disclose landlord's details (as per Sec 16(1)(u)) -- an enforcement provision. But fundamentally, rental income remains fully taxable. Also, budgets have adjusted the tax brackets and rates that apply to net rental income -- e.g., corporate rate 25% and individuals on sliding scale up to 40%.

In sum, section 8(1)(l) is a straightforward inclusion of all income from leasing or letting property. If you let it, you list it (in your income). The law backs that up unequivocally, ensuring landlords and licensors pay their share of tax on passive income from property.

What is included: Any subsidies or grants received in the course of trade, which are not of a capital nature, are included in gross income. Section 8(1)(m) targets amounts like government grants, incentives, or other payments intended to supplement a taxpayer's income or reduce expenses. If the subsidy relates to trading operations (revenue), it's taxable. (The document suggests "subsidies and grants" correspond to an inclusion, likely (m).)

Explanation: Often governments or other bodies give financial assistance to businesses -- e.g. an export incentive bonus, a farming input subsidy, a COVID-relief grant for businesses. These are not payments for goods/services sold, but they effectively augment profit. Tax law typically taxes them unless specifically exempted. Section 8(1)(m) ensures such receipts are treated as income. For example, if a maize miller gets a government subsidy of ZWL 100 per tonne to sell mealie meal at controlled prices, that ZWL 100/tonne is gross income (just as if the selling price was higher by 100). Similarly, if a manufacturing firm gets a cash grant for operational costs, it's taxable.

Example: AgroCorp receives a Government fuel subsidy of ZWL 500,000 for its tractors (to offset high fuel costs). This ZWL 500k is included in income (since the fuel expense was deductible, the subsidy is like negative expense, taxed). Another example: TourismDev Ltd gets a one-time grant of USD 10,000 from a government fund to support post-COVID recovery. Unless there's a specific exemption in the grant law, that USD 10k falls under gross income. The company can still deduct the expenses it uses the grant for (marketing, etc.), but the grant itself is income.

A nuance: if a grant is explicitly for purchasing a capital asset (say government gives money to buy factory equipment), that might be viewed as capital in nature (reducing the asset's cost for capital allowances, rather than immediate income). Section 8(1)(m) likely covers subsidies "of a revenue nature" -- i.e., those intended to subsidize trading receipts or expenses. Zimbabwe's Third Schedule sometimes exempts certain grants (e.g., some de-minimis small grants or NGO grants). But ordinarily, trading subsidies = income.

Relevant Case Law: COT v Evans Medical Supplies (ZM) -- not a real case, hypothetical to illustrate -- if a company got a government rebate on raw material costs, courts would likely treat it as income (follows the logic in UK case Seaham Harbour Dock Co where a grant for capital works was held not taxable because capital, vs Omir Rubber Goods where production incentive was taxed). In SA, ITC 1240* held a production incentive bonus was taxable. Zimbabwe codified it to avoid doubt.

The Zimbabwean legislature has in Finance Acts occasionally provided specific tax exemptions for particular grants (for example, relief funds for natural disasters might be exempt to encourage usage). But absent that, section 8(1)(m) is sweeping. The mention couples "subsidies and grants" with other inclusions, indicating they deliberately include them.

Distinguishing capital vs revenue grants: If the grant is for acquiring land, buildings, machinery (capital assets), arguably it's capital -- such could be offset by reducing the asset's tax base or ignored for income tax but might reduce depreciation claim. However, if a grant simply helps pay operating costs or is an output-based incentive, it's revenue and taxable. The law and ZIMRA practice typically tax operational subsidies. For example, a mining royalties rebate given back to the miner would be income (since royalties were deductible, the rebate is recouped).

Exceptions: If an international donor or government provides a grant to a charity or an exempt organization, that's outside taxable income by virtue of the recipient's status (exempt). Also, if Parliament declares a certain grant tax-free (some COVID relief to individuals was tax-free, etc.), then it wouldn't be included. For businesses, one rare example: The 2021 Post-COVID Recovery Grant could have been exempt by regulation -- if not, it's taxable.

2026 Update: The 2026 budget did not directly address subsidies. However, Zimbabwe's policy environment sees periodic producer subsidies (like farming input schemes). These are often delivered in kind (seed/fertilizer given) -- if so, for tax, receiving free inputs effectively lowers your deductible expense, which is similar to taxing a cash subsidy (you can't deduct what you didn't pay). If it's a cash subsidy, it's income and you deduct full costs -- same net. No new laws, but enforcement: ZIMRA looks at financial statements where "other income" often includes grants; they will ensure those are taxed.

In summary, section 8(1)(m) prevents a business from claiming expenses net of subsidy but not counting the subsidy. It basically says: whatever money you receive to support your trading income, count it as income. This aligns with accounting too -- typically grants related to income are in P&L. Tax just follows, except if explicitly carved out.

What is included: Any amount received by way of commutation of a pension or annuity from a pension fund (other than a retirement annuity fund) is included in gross income. In plain terms, if a person chooses to take a lump sum in exchange for giving up (commuting) part of their future pension, that lump sum is taxable income (subject to certain exemptions). Section 8(1)(n) deals with commutations from employer-sponsored pension or public service pensions, while section 8(1)(r) separately handles commutations from retirement annuity funds (RAFs).

Explanation: When someone retires or leaves a pension scheme, they often have the option to take a portion as a lump sum instead of periodic payments. That lump sum is called a pension commutation. It is essentially an advance payment of pension (which would have been taxable as annuity). So the law includes it in income. However, there are generous exemptions for commutations: generally, one-third of a pension can be commuted tax-free for those above a certain age or retrenched, etc. Specifically, per Third Schedule para 6(h1), if a person is retrenched before 55, the first US$10,000 or one-third (whichever is greater) of the commuted amount is exempt. (In local currency this has been adjusted: currently one-third up to around US$5k as earlier noted). If the person is 55 or older, their pension income is fully exempt going forward; thus a commutation at that stage might also escape tax to a large extent (though typically if over 55, they often commute tax-free by law). Section 8(1)(n) ensures that any taxable portion of a lump sum from a pension fund is captured.

Importantly, 8(1)(n) originally may have been the general pension commutation inclusion. Then with retirement annuity funds (where pensions are purchased privately), they added (r) to cover those in 2009. But focusing on (n): it covers commutation from the Consolidated Revenue Fund (government pension) or any occupational pension fund, if the pension itself would have been taxable.

Example: Mr. D (age 51) retires, entitled to a pension of $420,000 (present value). He elects to commute one-third for a lump sum. He receives $140,000 as lump sum and the remaining pension is reduced to $2,000/month. According to 8(1)(n), that $140k commutation is gross income. However, because he's under 55 and retrenched/retired, para 6(h1) exempts the first greater of $10k or 1/3 (here 1/3 of 140k = ~$46.7k, cap likely $80k in ZWL terms). Let's say US$46,667 exempt (one-third) up to a max (the Schedule gave ZWL numbers which convert to ~$80k, but assuming our scenario pre-limits). So roughly $93,333 becomes taxable. Plus, his ongoing reduced pension of $2k×12=$14k a year would ordinarily be taxable under (a), but since he's under 55, that portion is taxable in years received. If he had been 56, his pension and thus commutation might have been fully exempt due to age.

In practical Zim terms, tax-free commutation is commonly one-third (for those <55 on retrenchment or any age on retirement, often one-third is tax exempt up to certain caps). The exact amounts change with Finance Acts (as we saw: it was $10k or 1/3 up to $20k cap in 2019, raised to $50k local which was about $5k at time, etc.).

Relevant Case Law: There's little case law because it's straightforward and codified. A reference: COT v G (1945) (Rhodesia) considered whether a lump sum for past services is pension or gratuity (in either case taxable then). Now the Act directly taxes it. R v CIR, Ex parte W (1919) (South Africa) held commutation of a government pension is taxable (leading to similar provisions). Zimbabwe's law is explicit so disputes seldom reach court. Possibly disputes could arise on whether a payment is a "pension commutation" or damages (like if someone gets a lump sum for wrongful dismissal -- but that's more severance than pension). Those cases typically classify as severance (taxable under (b) not (n)).

Note on RAF vs Pension Fund: The Act split (n) and (r) because retirement annuity funds (RAFs) are personally funded; originally annuities from RAFs were not taxable (since contributions often not deductible fully). So a commutation from an RAF historically was not taxable if the annuity wouldn't have been taxable. Section 8(1)(r) says: commutation from RAF is taxable if the annuity itself would not have been taxable. It's oddly worded -- possibly to tax RA commutations only in some cases. But (n) covers typical pension funds where annuity would have been taxed (if under 55). In essence, if you commute a pension that would've been taxable, they tax the commuted amount (with reliefs).

Exceptions: If the commutation is from a pension that is exempt (e.g. war veterans pension, or someone over 55's pension), then it can be argued it shouldn't be taxed. Indeed 8(1)(n) might not apply if "the pension or annuity itself would not have been subject to tax" (that phrase appears in 8(1)(r) excerpt, possibly similar logic for (n)). And Zimbabwe law does exempt government pensions for over 55, etc. So likely: if a person is entitled to an exempt pension, the lump sum should similarly be exempt.

2026 Update: The main changes impacting this area recently were the reduction of tax-free retrenchment/commutation thresholds mentioned earlier. No further changes in 2026 specifically to pension commutation. The 2026 Budget is silent on raising those thresholds (given inflation, maybe they will in Finance Act 2025 but not noted yet). So as of Feb 2025, someone commuting a pension can still enjoy one-third tax free up to a certain ceiling, but large golden handshakes above that are partly taxed. The separate tax tables for lumpsums still apply (often effectively flat 40% for amounts above exemption if individual's other income is high).

In summary, section 8(1)(n) ensures that if you take your pension as a one-time lump sum, the taxable portion is brought to tax immediately just like the forgone annuities would have been. It prevents high earners from commuting entire pensions to try to get a capital receipt -- the law forecloses that by treating it as income (with some humane exemptions for modest amounts or older folks).

The specific inclusions of Section 8(1)(a)--(n) comprehensively enumerate what must be counted as "gross income" in Zimbabwe for tax purposes. These range from wages and fringe benefits, business trading receipts and debt waivers, to investment income, rental, subsidies, and retirement lump sums -- covering virtually every scenario where a person or entity's net worth increases in a non-capital way. By clearly labeling these categories, the Act simplifies tax administration and closes loopholes (one cannot easily argue something isn't income if it's listed in 8(1)).

For tax students and practitioners, understanding these inclusions is fundamental: it's the first step in computing taxable income. One must identify all gross income items (perhaps using this list as a checklist), then subtract exempt amounts and deductions to arrive at taxable income. The logic behind each inclusion ties to fairness and the character of the receipt: if it's an earning from labor, use of property, or from an arrangement substituting for such, it's taxed. Even non-cash and indirect gains are captured to ensure horizontal equity between cash-paid and benefit-paid taxpayers. The 2026 budget changes we noted mainly bolster enforcement (like rental withholding) and adjust thresholds (retrenchment and bonus exemptions), but the core inclusions remain stable.

Finally, the provided examples, case precedents, and summary tables (see below) help solidify the distinction between taxable income vs exempt income vs capital receipts. A quick reference table might look like:

Category	Taxable (Y/N)	Relevant Section	Exemptions/Notes
Salary, wages, overtime	Yes -- fully taxable	8(1)(b)	Bonus exempt up to $700 USD
Housing/vehicle benefit	Yes -- taxable value	8(1)(f)	Certain small benefits exempt (e.g. small loan)
Pension annuity (under 55)	Yes -- taxable	8(1)(a)	Deduct non-deductible contributions
Pension annuity (>=55)	No -- exempt	Third Sch 6(h)	Entire pension exempt after 55
Lump sum pension commutation	Yes -- taxable (part)	8(1)(n)	1/3 or $3,200 exempt, etc.
Gratuity/Severance pay	Yes -- taxable (part)	8(1)(b)	> of $5,000 or 1/3 up to $45k exempt
Rent from property	Yes -- taxable	8(1)(l)	$3,000/yr exempt if >55
Lease premium	Yes -- taxable	8(1)(d)	Taxed in full when accrued
Lease improvements (lessor)	Yes -- taxable (spread)	8(1)(e)	Spread over lease/<10yrs< /td>
Trading stock year-end	Yes -- included	8(1)(h)	Opening stock next year deductible
Trading stock personal use	Yes -- included (MV)	8(1)(h)	--
Business debt forgiven	Yes -- taxable	8(1)(k)	Not if via insolvency court
Government cash subsidy	Yes -- taxable	8(1)(m)	Unless for capital asset or exempt by law
Insurance payout (rev loss)	Yes -- taxable (recoup)	8(1)(j)	E.g. stock loss claim = income
Insurance (capital asset loss)	No under inc. tax (CGT?)	--	Capital in nature -- not gross income
Dividends from Zim company	Technically included, but exempt under general	(Would fall under general)	0% tax after 10% WHT final
Interest from bank (ZWL)	Included, but exempt up to certain limit	general	3rd Sch exempts $5k ZWL interest, WHT 15% final on excess
Lottery winnings	No -- capital (not "income")	--	(But separate lottery tax may apply)

(The above table is illustrative; actual thresholds may change with Finance Acts.)

By mastering each inclusion and its rationale, a tax professional can ensure all taxable income is accounted for while also applying the relevant exemptions and concessions to avoid over-taxation. The Zimbabwean Income Tax Act thus creates a broad base (through Section 8(1)(a)--(n)) from which the tax system then allows specific exemptions (Section 14, Third Schedule) and deductions (Section 15) to arrive at taxable income. Understanding "Specific Inclusions in Gross Income" is the vital first building block in that process.

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We also ensure that the whole team is included in the process and that no one is left out during the turnaround. The most crucial part is ensuring some degree of financial stability during the turnaround.
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We also ensure that the whole team is included in the process and that no one is left out during the turnaround. The most crucial part is ensuring some degree of financial stability during the turnaround.
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We also ensure that the whole team is included in the process and that no one is left out during the turnaround. The most crucial part is ensuring some degree of financial stability during the turnaround.

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