Question

List the criteria that must be met before an expenditure can be consider as an allowable trade or business tax deduction

**  Answers no need to be long. Several sentences will be acceptable. **

Answer 1

For an expenditure to be considered as an allowable trade or business deduction, following conditions should be met -

1, The expenditure must be revenue in nature i.e. capital expenditure such as purchase of buildings shall not be allowed as business deduction.

2. The expenditure should not be illegal such as bribe etc. i.e. only legal expenditures are allowed.

3. The expenditure must be incurred irrespective whether cash has been paid or it is outstanding.

4. The expense should not be specifically disallowed under Tax Provisions.