Special deductions Flashcards
Legal expense
-applicable to only specific legal costs
-deduction for the following expensense are allowed:
Fees for legal practitioner
Expenses incurred to procure evidence or expert advice
Court fees
Taxing fees, witness fees and expenses
Costs of sheriffs and messengers of the court
Other similar costs
Deduction and VAT
- If VAT can be claimed: Reduce amount of deduction with amount of VAT.
- If VAT can not be claimed: deduction = amount including VAT
Restraint of trade
limited to:
-amount/number of years
-amount*1/3
Doubtful debts
IFRS 9 Applied:
amount 40% for lifetime
amount25% for 12 months
IFRS 9 NOT applied:
40% allowance on debt due >/= 120 days
25% allowance on debt due >/= 60 days
what was deductible in prior years must be added back in gross income in current year.
double debts
Are not allowed
lease premium
deduction= (lease premium/years)*(mouths in current year YoA/12)
-number of years are limited to 25 years
-deduction for lessee
lease improvement
-calculate from date when improvement are completed
relief of lease
trading stock
stock sold - stock purchased
opening stock
closing stock
deduct stock purchase + add back closing stock
pre-trade expenditure and losses
employer’s contribution to retirement funds
donation
repayment of employee’s benefits
annuities to former employees and thier depends
repairs section
trading stock and VAT
amounts in Trial balance/stock count records- excluding vat
amount per invoice/bank statement-including VAT
BAD DEBTS VAT
input tax claimable = (Amount written off/total consideration of the supply)*output tax levied
BAD debts requirements
- the debt must be owning to the taxpayer
- the debt must have gone bad in the current year of assessment
- the amount must have been included in the income of the taxpayer in the current year of assessment or prior year
