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General Deductions - Coggle Diagram
General Deductions
- In the production of income
Port Elizabeth Tramway Co Ltd:
- What is the purpose of the expense?
- How closely connected is that expense to the
production of income?
Joffe & Co (Pty) Ltd:
If something is not an inevitable concomitant of the business operations it is not deductible.
BP Southern Africa:
Recurring payments for maintaining income earning operations are deductible.
This means mean it is incurred in the production of
income.
Provider:
Expenditure incurred to motivate 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.
Amounts paid in terms of a service package (employment contract) are deductible.
Mobile Telephone Network Holdings:
Incurring audit fees is necessarily attached to the performance of the taxpayer’s income earning operations.
Where a there is a split between producing income versus exempt income, apportionment has to take place.
Nasionale Pers Bpk:
If payment is contingent upon future events, the expense of that can only be actually incurred once conditions are met
Golden Dumps:
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
Edgars Stores Ltd:
An expense can only be deducted once there is an
unconditional legal obligation to pay the
expense
New State Areas Ltd:
Cost of establishing/ improving/adding income earning plant (fixed capital) is capital in nature and therefore not deductible
Cost of performing income-earning operations (floating capital)
which is revenue in nature and therefore deductible
Rand Mines:
Expenditure incurred to obtain an income earning right or structure will be capital in nature
BP South Africa:
The legal form of a payment does not determine whether it is capital or revenue; what matters is the purpose for which the expenditure was incurred. The shorter the period over which the benefit is enjoyed, the stronger the argument that the expense is revenue in nature. The key question is whether the payment results in an enduring benefit for the taxpayer.
-
Port Elizabeth Electric Tramway Co Ltd:
Losses - Losses of floating capital
Expenditure - Not only cash outflow but liabilities, that may be settled in cash or otherwise
Trade
-
Scribante Constructions:
Interest paid on loans, which loans assist a taxpayer to commercially operate more advantageous, will be expended for purposes of trade.
Borrowing money and re-lending constitutes the carrying on
of a trade.
- During the year of assessment
Sub Nigel Ltd:
Expense must be deducted in the year of assessment it was incurred. It cannot be claimed years later.