GDF: Expenditure and Losses

Question 1

Ackermans Ltd v C:SARS

Answer 1

Ackermans sold their business to pep stores.

Sold profits and liabilities so they had to sell the business at a lower price

LQ: Did A incur expenditure?

A: Yes

Court: expenditure means the actual incurring of a liability or an obligation to pay

Outcome: No liability to pay = no expenditure

Question 2

C:SARS v Labat

Answer 2

Case dealt with TP issuing shares in a company as payment for buying the company from 3rd party

expenditure = expending of funds that results in a diminution of assets or at the very least the movement of assets

Shares = a bundle of rights, no asset diminished pr moved = no expenditure