Please enable JavaScript.

Coggle requires JavaScript to display documents.

General Deductions Formula - Coggle Diagram

- - - - 'Trade' implies an active occupation, as opposed to the passive earning of investment income.
        
        Certain activities, such as investments in dividend-bearing and interest-bearing stock, are not included in the definition of trade.
        
        Pensions and other annuities received are also not considered income from trade.
  - - - The first requirement is that the taxpayer must be carrying on a trade.
      - The second requirement is that income must be derived from trade.
- - - - This type of expenditure is considered capital because it is spent in setting up the income-earning structure, not actually working it to produce income.
      - It is the money that is spent to put the taxpayer in a position to start earning income.
- - - - is the cost of acquiring, improving or expanding long-term assets that are used to generate income.
    - - is the cost of running the day-to-day operations of a business and is usually a short-term expense
  - - - This means that the expenditure is not deductible for tax purposes as it is considered to be an investment in the asset's future earning potential rather than a current expense incurred in producing income
  - - - when deciding whether an expense related to an intangible is capital or revenue, the concept of enduring benefit should be considered, but it is important to assess the individual circumstances of each taxpayer.
    - - if an expense is incurred with the intention of creating an enduring benefit, it is considered a capital expenditure
      - if the expense is not expected to produce a lasting benefit, it is considered a revenue expense.