Page 36 - TAX4862/2 APPLIED TAXATION
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GENERAL DEDUCTION FORMULA





                Not Of A Capital Nature


                It must therefore be established whether the expenditure

                is part of

                 the cost to perform the income-earning operations, or


                 the cost of establishing, improving or adding to the

                  income-earning structure.




                A distinction was made between two types of capital
                expenditure:


                 Floating capital expenditure. This represents a

                  deductible expenditure (for example, the purchase cost of

                  stock for which a s 11(a) deduction may be claimed).

                 Fixed capital expenditure. This represents capital

                  expenditure which may qualify for capital allowances but

                  not for a deduction under s 11(a).





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