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Case law for general deductions - Coggle Diagram
Case law for general deductions
Requirements for a deduction
income must be derived from a trade
the taxpayer must be carrying on a trade
what is trade ?
profession
business
employment
calling
occupation
venture
property letting
granting use of
patent
trademark
copyright
property
section 11(a) (positive test)
expenditure & losses
actually incurred
during assessment year
in production of income
not of a capital nature
case law & principles
expenditure & losses: Joffe&Co (Pty)Ltd vCIR, an expense is something a trader chooses to pay out, loss comes upon a trader both are settled in cash or otherwise
actually incurred: NasinalePers Bpk v KBI, if a payment is contingent upon the happening of an uncertain future event the and corresponding liability can only be actually incurred once the condition are met
during year of assessment : Concentra (Pty) Ltd v CIR, an expense must be deducted in the year of assessment in which it incurs it cannot be claimed in later years
in the production of income : Port Elizabeth Electric Tramway Co Ltd v CRI, link between expense & production of income-identify the purpose of the expense, verify the close link between the expense and production of income
not of a capital nature : New State Areas Ltd v CIR, Floating capital/income -earning operation are revenue in nature hence deductible while fixed capital/income-earning structure is capital in nature hence not deductible
