Answer to Question #75650 in Accounting for ibn

Question

Samantha owns and runs her own private ladies beauty clinic. She recently erected a billboard just outside the gates of the premises at a cost of R40 000. She pays R300 monthly for a small advert space in the local gazette. The local municipality fined Samantha R10 000 for placing the billboard on a public property without authority. She paid a further R3000 to have the billboard moved within the premises. She also paid R2000 to print pamphlets distributed on Women’s Day.
You are required to:
Discuss whether the expenses and losses are deductible under the general deduction formula.

Answer 1

by the General formula deduction. And the entire amount without restrictions.
R10000-sanctions paid to the budget (state off-budget funds) are not included in the calculation of income tax.
Billboard as the main tool is transferred for further use, the cost of the transfer is changed (increased) its original cost. So the R3000 also goes into a tax deduction. These expenses are deductible by the General formula deduction.