THE MEANING OF “EXPENDITURE” FOR PURPOSES OF SECTION 11(A) AND (GA) OF THE INCOME TAX ACT 58 OF 1962 CSARS v Labat Africa Ltd [2011] ZASCA 157

It is trite that a taxpayer may deduct, from his/her gross income, any expenditure or losses were actually incurred, in the year of assessment, relation to taxpayer’s trade and production provided not capital nature. Section 11(a) does require must have been incurred assessment. The courts have, however, interpreted this provision as restricting deductibility expenses often happens will engage transaction where goods are exchanged for services, services other rights. Conversely, barter, agreements akin thereto, still common phenomenon modern-day business. question arises whether payment kind satisfies requirement “expenditure” determine “expense” terms general-deduction formula. term defined Act. Supreme Court Appeal was recently called on CSARS v Labat Africa Ltd interpret meaning allotment issuing shares company exchange intellectual property rights, general deduction formula (or s 11(gA)), if so, what value would be attached such expenditure. This case discussion also critically discuss application judgment barter transactions substitutive performance made satisfy an obligation.