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An Analysis of the Term Actually Incurred in Section 11(a) of Income T

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An Analysis of The Term Actually Incurred In Section 11(a) of Income Tax Action
Act No 58 of 1962

A TECHNICAL REPORT TO BE PRESENTED TO THE DEPARTMENT OF ACCOUNTING UNIVERSITY OF CAPE TOWN

IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE BATCHELOR OF COMMERCE (HONOURS) DEGREE IN TAXATION

BY

PETER CRAWFORD STUDENT NO. CRWPET005 APRIL 1996

I certify that the report is my own work and all references used, are accurately recorded.

1.SYNOPSIS …show more content…

It will try to better understand the meaning and implications of this phrase, with a view to be able to better manage and control its impact on the recognition of expenditure and losses. It will also explore some of the grey areas that can and have caused the taxpayer and the fisc considerable problems in the past. In concluding, some of the recent legislative changes will de discussed and considered.

2. ACTUALLY INCURRED IN THE CONTEXT OF SECTION 11(a).

Section 11(a) of the South African Income Tax Act No. 58 of 1962(as amended), reads as follows:

11. General deductions allowed in determination of taxable income.- For the purpose of determining the taxable income derived by any person from the carrying on of any trade within the Republic, there shall be allowed as deductions from the income of such person so derived-

(a) expenditure and losses actually incurred in the Republic in the production of the income, provided that such expenditure and losses are not of a capital nature.

Section 11(a) is broadly referred to as the general deduction provision. It is intended to cover the requirements for expenditure and losses to be deductible in the determination of taxable income. Whilst the section is comprehensive as it stands, there is a further critical requirement that the

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