The Time Element in Deductions Cases

Section 104 of the Income Tax Act 1976 sets out the test for deductibility from assessable income. The article focuses on the issue of time in the test. First, at what stage can an item of “expenditure” be said to have been “incurred” by the taxpayer? Can expenses be estimated or spread forward into the future? Secondly, it considers the problem of the expense that is so removed in time from the income-producing activity by which it is occasioned that it becomes questionable whether it is deductible at all