| 6/1/2009 |
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| Board of Special Commissioners - Cases |
| Case No. 32/65 |
Decided: 15 July, 1967 |
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Expenses incurred in administering an estate deemed not to be necessarily domestic in nature; it was not always reasonable to allow only a standard administration fee - article 10, now 14, Income Tax Act
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Appellant, who owned a large estate, claimed that all expenses incurred in its administration should have been deducted. The Commissioner, according to usage, considered such expenses to be domestic in nature and allowed an allowance of 4% of the rental income by way of administration fees.
The Board observed that it was the norm to consider such expenses to be of a domestic nature since one is normally expected to administer one's own property. There might be cases, however, when this was not possible due to the entity of the estate or other valid reasons, so one had to analyse the situation objectively and not just allow a set fee. If it was established that expenses were actually incurred in the production of the income and absolutely necessary and not fictitious or unrealistic, then these should be treated as revenue in nature. As was the case at issue, it was not reasonable to expect that income would be produced by the estate in the way it should without the relevant expenditure being incurred in its administration.
An appeal was entered before the Court from this decision (see case no. 69).
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