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CASE LAW FOR GENERAL DEDUCTIONS. - Coggle Diagram
CASE LAW FOR GENERAL DEDUCTIONS.
Trade
Difinition
Occupation or venture
Letting of any property
Every profession, Trade, business
Use of any patent, trade, design, trademark and copy right.
Carrying on Trade
NOT trade
Investments (passive income)
Intersts
Dividends
Long term objective to generate profit
Continuity of activities
Involves active steps in generating profits
In the production of income
The principle of the law
The expense deduction can only be allowed where if:
The purpose of the expense is to produce income
Closely related to the production of income
Name of case law
Joffe and Co
Port Elizabeth Electric Tramway
The principle of the law
Losses are possibly expenditure of an involuntary nature in trade
Expenditure and losses refer to both cashflow and liabilities
which may be settled in cash or otherwise.
They are deductible
Expenditure & Losses
Name of case law
Joffe & Co (Pty) Ltd
Port Elizabeth Electric Tramway Co Ltd
Actually Incurred
Name of case law
Edgars Stores
Nasionale Pers Bkp
The principle of the law
there is an unconditional legal obligation to pay the expense.
liability has been incurred
An expense can only be deducted once
an obligation has risen
If payment is contingent upon happening of uncertain
future event an expense or liability can only be actually incurred
once the conditions are met
Not of capital nature
Name of case law
New State Areas Ltd
The principle of the law
in nature, are deductible.
Costs of establishing, improving, and adding income earning
Costs of performing income earning operations are revenue
structure are capital in nature and not deductible.
During the year of assessment
The principle of the law
An expense must be deducted in the year of assessment it is incurred.
mustdeducted in year of assessment
the expense was actually incurred.
It cannot be claimed in later years.
Name of case law
Sub-Nigel Ltd
Golden Dumps (Pty) Ltd
