| 22/8/2008 |
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| Board of Special Commissioners - Cases |
| Case No. 27/51 |
Decided: 2 April, 1953 |
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Expenses incurred in obtaining a professional qualification are of a capital nature and not deductible; a deduction is to be allowed when incurred and not when paid - article 10 and 11, now 14 and 26, Income Tax Act
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Between 1945 and 1948, appellant undertook a course overseas to obtain a professional qualification and, subsequently, a promotion in the company with which he was employed. Part of the expenses of the course were to be borne by appellant by having a monthly amount deducted from his salary. On the amount remaining unpaid his company charged him interest at the rate of 0.5% per annum.
The Board did not allow any deduction in respect of the course expenses borne by appellant. It held that the cost of acquisition of professional qualifications is not allowable as an expense incurred in the performance of the duties of an employment. Such expense was of a capital nature and, as such, specifically disallowed by article 11.
Besides, the expense is to have been incurred in the year immediately preceding the year of assessment. Now in the present case the year under appeal was 1950 while the whole expense had been incurred during previous years.
The Board however agreed to allow appellant a deduction in respect of the interest on capital employed in acquiring the income. The Commissioner had opposed this deduction claiming that such interests were not incurred in trade, but the Board held that the law did not restrict the deduction in respect of interest only when incurred in trade.
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