Page 15 - Taxation F6
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General Deduction
• Meaning of trade
- Continuity of activities
- The long term objective is to generate profits.
Deductions relating to the rental income from single residential property.
Letting of property does not necessarily constitute trade even though it is included in
the definition of trade.
In practice SARS allows the deduction relating to rent but limited to the income from
the rentals.
A taxpayer may be carrying on a trade even if he does not have a profit object.
Trade does not include passive earning of income like (interest ,dividends , annuities
or pensions)
If you accumulate savings and earn interest the interest is not earned from carrying on
a trade however if you borrow money to specifically invest , the interest earned is as a
result of trade and the expenses relating to the interest are deductible.
Carrying on trade requires active steps rather than being passive.
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