Jack Brown, a resident of the Republic, has been achieving a reasonable return from the letting of a block of 15 flats that he purchased in 1993. He does not have a history of property dealing. Jack is aware that he can make a substantial profit by selling the 15 flats individually. He has made application for a sectional title register to be opened. To make the flats more attractive to would-be purchasers, Jack is considering improving them.
Required: Discuss with reasons whether Jack Brown’s receipt or accrual from the sale of the flats is of a revenue nature. Deal with the position when the flats are sold individually without improvements being made to them, and the position when the flats are first improved, and then sold.