Section 777: Conditions for sections 778 and 779 to apply
2283.This section sets out the circumstances in which income is treated as arising. It is based on sections 775(1), (3), and (7) to (9) and 777(13) of ICTA.
2284.Subsection (1) specifies three conditions (labelled A to C) which must all be met if section 778 or, as the case may be, section 779 is to apply.
2285.Subsection (2) sets out condition A, which is about location of the occupation carried on by the individual.
2286.Subsection (3) sets out condition B, which is about the ways in which transactions are effected or arrangements made to exploit the individual’s earning capacity in the occupation.
2287.Subsection (4) is based on the explanation of the meaning of “income or receipts derived from the individual’s activities” in section 775(3) of ICTA.
2288.Subsection (5)sets out condition C, which is about the receipt of a capital amount by the individual, either for the individual or for another person.
2289.Subsection (6) provides further details about what the previous subsection includes.
2290.Subsection (7) defines “capital amount”. It is based on section 777(13) of ICTA. Section 777(13) of ICTA refers to “any amount … which, apart from the sections 775 and 776, does not fall to be included in any computation of income for purposes of the Tax Acts”. It is not possible for an amount to be treated as income both by section 775 and by section 776 of ICTA, and so subsection (7) does not rewrite the reference to section 776.
