NB notes
General deductions Court cases summary
Carrying on a trade
Burgess: Trade does not include income in the form of passive interest, dividends, annuities or
pensions
Expenditure and losses
Joffe & Co: Voluntary payment (expense) vs involuntary deprivation (Losses)
Labat: Expenditure paid through issue of shares is not a deductible expenditure
Actually incurred
Not necessarily incurred
Nasionale Pers: Suspensive condition postpones incurral (If there is still a condition it can’t be
deducted)
Edgars stores: Must be an unconditional legal obligation
Labat: Expenditure paid through issue of shares is not a deductible expenditure
Incurred during current YOA
Sub-Nigel Ltd: no expenditures of a precious YOA can be deducted
REFER TO PREPAID EXPENDITURES
In the Production of Income
Port Elizabeth Electric tramway Co: Has to be a necessary concomitant
Nemojim: Only expenditure used to generate income (and not exempt income) may be deducted
MTN Holdings: Audit fees deductible if evident that auditor’s role was necessary
Provider: Amount paid to keep employee at workplace is deductible
Not of a capital nature
New state areas: Cost to perform the income earning operations (deductible) vs cost of establishing
income earning structure (Not deductible)
Rand Mines: acquisition of income earning structure – not deductible
General deductions Court cases summary
Carrying on a trade
Burgess: Trade does not include income in the form of passive interest, dividends, annuities or
pensions
Expenditure and losses
Joffe & Co: Voluntary payment (expense) vs involuntary deprivation (Losses)
Labat: Expenditure paid through issue of shares is not a deductible expenditure
Actually incurred
Not necessarily incurred
Nasionale Pers: Suspensive condition postpones incurral (If there is still a condition it can’t be
deducted)
Edgars stores: Must be an unconditional legal obligation
Labat: Expenditure paid through issue of shares is not a deductible expenditure
Incurred during current YOA
Sub-Nigel Ltd: no expenditures of a precious YOA can be deducted
REFER TO PREPAID EXPENDITURES
In the Production of Income
Port Elizabeth Electric tramway Co: Has to be a necessary concomitant
Nemojim: Only expenditure used to generate income (and not exempt income) may be deducted
MTN Holdings: Audit fees deductible if evident that auditor’s role was necessary
Provider: Amount paid to keep employee at workplace is deductible
Not of a capital nature
New state areas: Cost to perform the income earning operations (deductible) vs cost of establishing
income earning structure (Not deductible)
Rand Mines: acquisition of income earning structure – not deductible
