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GENERAL DEDUCTIONS - Coggle Diagram

- - - - Case and Principle
        
        Joffee & Co
        
        Losses are involuntary in nature
        
        Expenses are voluntary in nature
        
        Port Elizabeth Electric Tramway
        
        Losses refer to losses of floating capital
    - - Case and Principle
        
        Edgars Stores
        
        An expense can only be deducted once there is an unconditional legal obligation to pay the expense.
        
        Golden Dumps (Pty) Ltd
        
        Where an obligation to pay an amount is in dispute, the expense can only be actually incurred when the dispute is settled with regards to the obligation and the amount thereof.
        
        Nationale Pers Bpk
        
        If a payment is contingent upon the happening of an uncertain future event, the expense and corresponding liability can only be actually incurred once the conditions are met.
    - - Case and Principle
        
        Sub-Nigel Ltd
        
        An expense must be deducted in the year of assessment that it is incurred, it cannot be claimed in later years.
    - - Case and Principle
        
        New State Areas Ltd
        
        Fixed capital (capital in nature) vs floating capital (revenue in nature)
        
        Rand Mines
        
        Cost incurred to create a capital structure = capital cost incurred to work the capital structure = revenue.
    - - Case and Principle
        
        Joffe & Co
        
        If something is not an inevitable concomitant of the business operations it is not deductible.
        
        Provider
        
        Amounts paid in terms of a service package (employment contract) are deductible.
        
        Port Elizabeth Electric Tramway
        
        Link between expense and production of income:
        • What is the purpose of the expense?
        • How closely connected is that expense to the production of income?
        
        Mobile Telephone Network Holdings
        
        Incurring audit fees is necessarily attached to the performance of the taxpayer’s income earning operations i.e. Audit fees are incurred in the production of income.