Trading profits Flashcards
1
Q
Badges of trade:
A
As there is no statutory definition of ‘trading’ the courts have developed a number of tests to determine whether an entity is trading
2
Q
Adjustment to profits:
A
The process whereby an accounting profit or loss is adjusted to accord with tax law.
3
Q
Trading allowance:
A
An allowance which effectively exempts an individual’s trading profits which are less than the trading allowance
4
Q
Allowable expenditure:
A
Expenditure incurred wholly and exclusively for the purposes of the trade, not specifically disallowed by legislation.
5
Q
Appropriations of profit:
A
Withdrawals from a business (such as the payment of a ‘salary’ to a sole trader or partner, or dividends paid by a company to shareholders) after tax ie, they are not allowable for tax purposes.
