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

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2
Q

Adjustment to profits:

A

The process whereby an accounting profit or loss is adjusted to accord with tax law.

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3
Q

Trading allowance:

A

An allowance which effectively exempts an individual’s trading profits which are less than the trading allowance

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4
Q

Allowable expenditure:

A

Expenditure incurred wholly and exclusively for the purposes of the trade, not specifically disallowed by legislation.

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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.

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