Business Expense Deductibility Checker

Generally, deductible business expenses are those 'wholly and exclusively incurred in the production of income'. In other words, they must satisfy all these conditions:

• The expenses are solely incurred in the production of income.
• The expenses must be incurred. It is considered incurred when the legal liability to pay arises, regardless of whether the actual payment has been made.
• The expenses are revenue in nature, and not capital expenses. Revenue expenses are generally costs incurred in the day-to-day operations of a business to generate revenue (such as salaries, rent, and utilities), while capital expenses are investments in the business that are expected to provide long-term benefits (such as acquisition of fixed assets).
• The expenses are not prohibited from deduction under the Income Tax Act 1947.