n Professional Accountant - Deducting pre-trade expenses : the tax professional

Volume 2009 Number 1
  • ISSN : 1680-7537


One of the key requirements for deducting expenditure under the general deduction formula in the Income Tax Act is that the expense must be incurred by the taxpayer in the course of carrying on his trade. Of course, it may well be that a person starting out a new business may incur various expenses before he actually starts trading and, as a result of this rule, and on the basis of this requirement, these expenses would then not be deductible (apart from pre-production interest which is allowable under section 11(bA)). Strictly, these expenses are regarded as being capital in nature as they are incurred in setting the person up to earn income.

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