The Income Tax treatment of legal expenses
| OUTCOMES OF TOPIC After studying this topic related to legal expenses, you should be able to: ✓ Understand that, in addition to deductions which are allowed in terms of the general deduction formula, there are certain special deductions that are specifically allowed in terms of provisions contained elsewhere in section 11 of the Income Tax Act (ITA); ✓ Determine whether a legal expense meet the requirements of s 11(c) of the ITA; ✓ Understand what the definition of an “expense” is for accounting purposes; ✓ Understand the accounting treatment leading to the recognition of legal expenses as an expense in the Statement of Profit or Loss and Other Comprehensive Income; ✓ Determine the tax treatment of legal expenses and identify whether any adjustments to the tax calculation are necessary; ✓ Be able to properly disclose adjustments related to legal expenses and complete the relevant sections of the ITR14. |