Commentary

B2.324 Application of profits vs deduction in computing profits

Business tax
Business tax | Commentary

B2.324 Application of profits vs deduction in computing profits

Business tax | Commentary

B2.324 Application of profits vs deduction in computing profits

No deduction is available in respect of expenditure which represents the application of the profits earned1. Such expenditure is not incurred for the purposes of the trade but for the purpose of enabling the profits of the trade to be distributed or applied for a particular purpose. No deduction may be claimed, therefore, by a company in respect of its dividends or other distributions. In Thomson (Archibald) Black & Co Ltd2 the company incurred expenditure in applying to the court to have its capital reduced, so enabling it to pay a dividend. Although the expenditure was held to have been quite properly incurred and the company's action to have been in its own interest, the expenditure was

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