| 22/8/2008 |
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| Board of Special Commissioners - Cases |
| Case No.18/50 |
Decided: 8 February, 1951 |
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Deductions claimed by a medical practitioner: bad debts; free-of-charge services; medical bills not issued; private and professional use of car - articles 5(1), 10(1) and 11(h), now articles 4(1), 14 and 26, Income Tax Act
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Appellant was a doctor who claimed that the assessment was excessive. He produced detailed records regarding his regular patients while with respect to occasional patients he had made a rough estimate. Besides he claimed that from his income the Commissioner had failed to deduct: (a) bad debts in respect of a number of his patients who had failed to pay; (b) services rendered free-of-charge; (c) services which were to be invoiced the following year.
Regarding (a) the Commissioner maintained that for a bad debt to be allowed as a deduction, it was necessary that this became irrecoverable; a medical bill which had not yet been paid did not necessarily constitute a bad debt. With respect to (b) appellant could not expect a deduction for services rendered free-of-charge because these constituted payments of a voluntary nature. Regarding (c) the Commissioner contended that according to the "earnings basis" the bills of those patients who had received appellant's services but had not yet been invoiced should form part of his income for the year under appeal.
The Board agreed with the Commissioner regarding (a) and (c) but not with respect to (b): free-of-charge services to relatives, institutions, etc. did not constitute payments of a voluntary nature. The Board established criteria for the quantification of motor vehicle expenses. The Board distinguished between "running charges" and "standing charges". In the case of "running charges" the amount to be allowed was to be in proportion to the professional use of the car. As regards the "standing charges" the deduction was to amount to half of the expense incurred.
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