Please enable JavaScript.
Coggle requires JavaScript to display documents.
general deductions - Coggle Diagram
general deductions
BP Southern Africa
-
-
Royalty payments are of a revenue nature and deductible if the intellectual property is used in the production of income. Therefore, use of rights of patents, copyright and inventions are deductible
-
trade
for the purpose of determining the taxable income derived by any person from carrying on any trade, there should be allowed as deductions from the income of such person derived
-
-
positive test
- during the year of assessment
- in the production of income
-
-
-
Sub-Nigel Ltd 
An expense must be deducted in the year of assessment that it is incurred, even if it will only produce income in future years
-
Provider
Expenditure incurred to induce the employees to enter and remain in the service of the taxpayer may qualify as a deduction since the purpose is to produce current or future income.
-
Mobile Telephone Networks Holdings (Pty) Ltd
audit fees
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
Where a there is a split between producing income versus exempt income (thus where audit fees are incurred for a dual purpose), apportionment has to take place
Apportioning audit fees based on time spent on areas generating exempt versus non-exempt income is not necessarily correct. Apportionment will depend on the facts of each case; a reasonable apportionment approach will thus be followed
training fees
if an expense is necessary in order to trade effectively, ie there is a direct link between the training fees and the taxpayers trading activities,, it will nt be capital in nature and will be allowed as a deduction
Joffe and Co
-
Negligence resulted in the roof collapsing and is thus not an inevitable part of trade and not incurred in the production of income
Scribante Constructions
interest paid loans which loans assist a taxpayer to commercially operate more advantageous will be expended for purposes of trade
-
Port Elizabeth Electric Tramway
- What is the purpose of the expense?
- How closely connected is that expense to the production of income?
Rand Mines
-
Cost incurred to create a capital structure = capital
Cost incurred to work the capital structure = revenue
New state Areas Ltd
fixed capital
cost of establishing/ improving/ adding income earning plant , fixed capital, is capital in nature and therefore not deductible
floating capita
cost of performing income-earning operations, floating capital, which is revenue in nature and therefore deductible
-
Golden Dumps (Pty) Ltd
Where 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
Burgess
-
Edgars Stores
An expense can only be deducted once there is an unconditional legal obligation (not contingent) to pay the expense
Nasionale Pers Bpk
If a payment is contingent upon the happening of an uncertainfuture event, the expense and corresponding liability can onlybe actually incurred once the conditions are me
BP South Africa
The legal categorisation of a payment does not determine whether it is capital or revenue, but rather the purpose of the expenditure. The shorter the period of endurance to which the payment relates, the easier it is to argue that it is revenue in nature. Was an enduring benefit created?
Flemming
The expenditure incurred must be as a result of damage or the need to repair an asset that has been subject to use, in order to be classified as a repair. The cost must maintain the income earning ability of the asset, not improve this