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1 Profits Tax: DeductionsA.Main provision for deductibility: IRO s.16 (P.177 Casebook) Section 16(1) provides for deduction from chargeable profits: ➘all outgoings or expenses incurred ➘during the year of assessment ➘to the extent to which they are incurred in the production of chargeable profits for any period B.Expenditure not deductible: IRO s.17(1) (PP.177-178 Casebook) (a)Domestic or private expenses (b)Disbursements or expenses not being money expended for the purpose of producing chargeable profits (c)Expenses capital in nature or loss/withdrawal of capital C.Issues to resolve for determining the deductibility of an expense item under IRO ss. 16(1) and 17(1) (a)Has the expense been incurred? (PP.178 – 184 Casebook) (b)Effect of accounting principles/standards on the deductibility of an expense item? (PP. 184 -187 Casebook) (c)To what extent was the expense incurred in the production of chargeable profits? (PP. 188 – 200 Casebook) (d)Was the expense capital in nature? (PP. 200 – 212 Casebook) (e)Was the expense domestic or private? (PP. 212 – 215 Casebook) (f)Special deductions (ss. 16A through to 16I) (PP. 215 – 220 Casebook)
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