Page 15 - TAX4862/2 APPLIED TAXATION

GENERAL DEDUCTION FORMULA

Expenditure or losses

The ordinary meaning of ‘expenditure’ refers

to the action of spending funds;

disbursement or consumption; and hence the

amount of money spent. The terms

‘obligation’ or ‘liability’ and ‘expenditure’ are

not synonyms.

If a company issues shares to pay for services

or to purchase an asset, no expenditure is

incurred. (CSARS v Labat) Expenditure requires a reduction

(even if only temporary) or at the
very least movement of assets of
the person who expends.

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