The issue of shares is not 'expenditure' for the purposes of the Income Tax Act : Commissioner, South African Revenue Service v Labat Africa Ltd

Abstract

Section 11 of the Income Tax Act 58 of 1962 ('the Act') provides for deductions in the determination of a taxpayer's taxable income. Section 11(gA), as it read during the 2000 tax year, provided for the amortisation of the cost of the acquisition of intellectual property rights at the rate of four per cent per annum. The salient provisions of the section provided (at the relevant period) that for the purpose of determining the taxable income derived by any person from carrying on any trade within the Republic, there shall be allowed as deductions from the income of such person so derived an allowance in respect of any expenditure actually incurred by the taxpayer in acquiring by assignment from any other person any trade mark, if such trade mark is used by the taxpayer in the production of his income, or income is derived by him therefrom