Question

What are the negative and positive limbs regarding deductions?

Answer 1

Section 8-1(1) provides two positive limbs:

(a) The loss or outgoing which needs to be deducted must be incurred directly in relation to gaining the assessible income,

(b) such loss or outgoing is solely incurred in the normal course of business for the purpose of gaining assessible income.

Atleast one of these must be proved in order to apply for general deduction.

Section 8-1(2) provides four negative limbs, If any of these negative limbs apply, the deduction will be denied

(a) loss or outgoing is of capital nature

(b) loss or outgoing is of private or domestic in nature

(c) if such loss or outgoing is incurred in order to gain exempt income or non-assessible income

(d) if any Provision of this Act prohibits you from deducting loss or outgoing