Lesson 5 Allowable & Disallowable in Taxation-1-1.pdf - Allowable Disallowable Expenses in Taxation Dr M Amidu Dr I Bedi and Mr A Ali-Nakyea

Lesson 5 Allowable & Disallowable in Taxation-1-1.pdf -...

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Allowable & Disallowable Expenses in Taxation Dr. M. Amidu, Dr. I. Bedi and Mr. A. Ali-Nakyea
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§ For the purposes of ascertaining the income of a person for a basis period from any business, employment, or investment there shall be deduction § All outgoings and expenses wholly, exclusively and necessarily incurred during that period by that person in the production of the income from the investment or business during the year. § A deduction shall not be allowed under subsection (1) for an expense that is of a capital nature § For purposes of this section, “expense that is of a capital nature” includes an expense that secures a benefit that lasts for more than twelve months. Dr. M. Amidu, Dr. I. Bedi and Mr. A. Ali-Nakyea
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§ Special treatment on some allowable deductions: § Repairs and improvements are deductible whether they are capital nature or not. However, the deduction rules must be applied: 1. It should not exceed 5% of the written down value of the pool at the end of the year 2. It is allowed in the order the expense is incurred (FIFO) 3. The excess expense disallowed by the limiting rule in (1) above, must be added to the depreciation pool it relates Dr. M. Amidu, Dr. I. Bedi and Mr. A. Ali-Nakyea
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§ What will be the tax gain by GRA given the following?
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