oa Journal of Economic and Financial Sciences - The "trade" requirement for income tax purposes : a reappraisal
CSARS v Smith 65 SATC 6
For income tax purposes it is often vital that a taxpayer conducts a trade. Although it is not the case that only amounts arising from trading activities that are taxable (Definition of "taxable income in s 1 of the Income Tax Act 58 of 1962 ("the act")), generally expenditure is only deductible if the taxpayer conducted a trade (s 11(a)). Where expenditure is partly incurred for the purposes of trade and partly for non-trading purposes, a deduction is only allowed to the extent that the expenditure was incurred for the purposes of trade (s 23(g)). In addition, a company may only carry forward an assessed loss if it conducted a trade in the subsequent year of assessment (s 20(2A)). Special rules are also applicable to certain specific trades: see, for example, s 26, which provides for the determination of taxable income of any person carrying on pastoral, agricultural or any other farming operations.
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