Deductions- Case Law

Question 1

Trade- Burgess

Answer 1

Wide interpretation given to trade.

Question 2

Expenditure and Losses- Joffe

Answer 2

If not an inevitable concomitant of business operations, not deductible.

Question 3

Actually incurred-Nasionale Pers BPK

Answer 3

Provision does not constitute expenditure actually incurred.

Question 4

Actually incurred- Edgars Stores

Answer 4

unconditional legal obligation( not contingent)

Question 5

Actually incurred- Golden Dumps

Answer 5

Amount in dispute only actually incurred when dispute settled.

Question 6

During year of assessment- Sub-Nigel Ltd

Answer 6

Accounting Matching principle is irrelevant.

Expense can only be claimed in year incurred.

Question 7

In production of income- Port Elizabeth Electric Tramway

Answer 7

1. Purpose of expense?

2. How closely connected is expense to production of income?

Question 8

In production of income- Joffe and Co

Answer 8

If not an inevitable concomitant of business operations not deductible.

Question 9

Not of a Capital nature- New state Areas Ltd

Answer 9

Fixed Capital Vs. Floating Capital

Question 10

Not of a Capital nature- George forest Timber

Answer 10

Fixed Capital Vs. Floating Capital

Question 11

Not of a Capital nature- BP South Africa

Answer 11

Purpose of expense and not the legal classification thereof.