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DEDUCTIONS - Coggle Diagram

- - - - Donation to charity. PnP had two objects (Philanthropy and advertising) so deduction was not allowed
  - - - Expenditure= action of spending funds, disimbursement or consumption. Expenditure must result in reduction of assets of taxpayer or at least the movement of assets of person who expends amount. The issue of shares by a company for debt due for IP acquired by company is not expenditure.
  - - - Edgars had to pay basic rent and turnover rental. Edgars included both amounts as deductions (as estimates since the accurate figures were not yet available) court held that normal rental accrued and was deductible but turnover rental was contingent until turnover of lease year is determined (which was after the tax year so can’t be deducted)
        Also if obligation is certain, but it can’t be quantified, it can qualify as a deduction- genuine estimate may be allowed if ceratin
    - - Refund of deposit for return of container is not a deduction- no certainty that it would be returned. Should have no regard to how taxpayer prepared annual financial statements
    - - Expenditure does not incur in a year of assessment if it is subject of bona fide dispute. only once the dispute is settled- by admitting or being settled by court/arbitrator- can the expenditure occur
  - - - TEST-see whether act to which expenditure is attached is performed in the production of income and whether expenditure is linked to it closely enough
  - - - Payments made in respect of the internal sewers were of a capital nature, because it remained the property of the company
        the payments made in respect of the external connections, which did not produce any permanent asset for the company, constituted in effect a charge for the use of the local authority’s system, was a recurrent business charge- Not capital
- - - - Court didn’t allow damages, or legal costs, to be deducted as negligent construction damages were not a necessary concomitant of trading operation and expenditure was not incurred for purpose of taxpayer’s trade