QUESTION 1
The following requirements are for the general deduction formula:
Definition/Requirement Application
Carrying on of Trade Manufac is carrying on a trade of manufacturing
Expenditure or loss A loss of R352 000 has been incurred in terms on the
mediation settlement agreement.
Actually incurred With the mediation process concluded by a formal
agreement, a loss equivalent to the R352 000 was actually
incurred
During the year of assessment The agreement took place on 15 November 2021 and the
loss was subsequently incurred thus falling in the current
year of assessment
In the production of income The cost had to be incurred during the process of
producing income; nevertheless, the expenditure was not
incurred during the process of producing income but
rather as a result of infringing on a design
Not of a capital nature The expenditure is of a capital nature because it is
compensating for the loss of sales, hence it cannot be of a
capital nature.
Conclusion The R352 00 loss does not complies with all the
requirements of section 11(a).
Manufac (Pty) Ltd. won't be allowed to deduct
the
R352,000 in question. so as for an expense to be
, deductible in keeping with the quality technique,
it's necessary that the cash was spent on the
assembly of financial gain.
The expenditure is of a capital nature because it
is compensating for the loss of sales, hence it
cannot be of a capital nature.As a result,
Manufac (Pty) Ltd. will not be able to claim a
deduction for the R352,000 according to the
standard formula for claiming deductions.benefit
of using the general deduction formula is that it
enables the deduction of expenses that are
incurred in the process of producing income.
This is an important aspect of the deduction
process.
QUESTION 2
The following requirements are for the general deduction formula:
Definition/Requirement Application
Carrying on of Trade Manufac is carrying on a trade of manufacturing
Expenditure or loss A loss of R352 000 has been incurred in terms on the
mediation settlement agreement.
Actually incurred With the mediation process concluded by a formal
agreement, a loss equivalent to the R352 000 was actually
incurred
During the year of assessment The agreement took place on 15 November 2021 and the
loss was subsequently incurred thus falling in the current
year of assessment
In the production of income The cost had to be incurred during the process of
producing income; nevertheless, the expenditure was not
incurred during the process of producing income but
rather as a result of infringing on a design
Not of a capital nature The expenditure is of a capital nature because it is
compensating for the loss of sales, hence it cannot be of a
capital nature.
Conclusion The R352 00 loss does not complies with all the
requirements of section 11(a).
Manufac (Pty) Ltd. won't be allowed to deduct
the
R352,000 in question. so as for an expense to be
, deductible in keeping with the quality technique,
it's necessary that the cash was spent on the
assembly of financial gain.
The expenditure is of a capital nature because it
is compensating for the loss of sales, hence it
cannot be of a capital nature.As a result,
Manufac (Pty) Ltd. will not be able to claim a
deduction for the R352,000 according to the
standard formula for claiming deductions.benefit
of using the general deduction formula is that it
enables the deduction of expenses that are
incurred in the process of producing income.
This is an important aspect of the deduction
process.
QUESTION 2
