Typical Expenditure by a Business (3)

Question 1

Fines and penalties?

Answer 1

Not allowable unless parking fine paid on behalf of an employee and incurred whilst in business

Question 2

What happens to accounting profit?

Answer 2

Must be adjusted for the private expenditure of the business owner

Question 3

Deduction in owner’s salary
Drawings or interest on capital invested in business

Answer 3

Disallowed

Question 4

Interest paid on overdue tax?

Answer 4

Not deductible

Question 5

Interest received on overpaid tax?

Answer 5

Not taxable

Question 6

Salary at the commercial rate for work done

Answer 6

Allowable

Question 7

Pre-trading expenditure?

Answer 7

Allowable, if incurred in the seven years before a business commences to trade

Question 8

What happens if an owner removes goods from the business for his own use?

Answer 8

Must add back the item as a sale at market value

Question 9

What if the owner accounts for the cost of the goods in the business accounts?

Answer 9

Owner only needs to add back the lost profit on the item