Hi May I know, What are allowable and dis-allowable expenditure?
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Expenses incurred solely for business purposes are generally allowable. This expenditure is usually referred to as 'Wholly & Exclusively'. Disallowable Deductions.
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We have just run an internal bingo game for all the staff in order to incentivise and increase attendance in our stores. It run in the usual "bingo" way, a number was drawn each day of the week and the first to get a full house wins a one week all expenses holiday for two paid for by the company. The condition was that you needed a pre-determined level of attendance and were not late more than three times.
--Expenses incurred solely for business purposes are generally allowable. This expenditure is usually referred to as 'Wholly & Exclusively' . Allowable expenditures are allowed to claim as business expenditure under income tax act.
--Expenditure which is not wholly and exclusively intended for trade purposes, is not allowable and called dis allowable expenditure. Dis allowable expenditures are not allowed to claim as business expenditure from the income
In nutshell Allowable expenses are expenses that can be deducted from your income or gain hence no tax liability...Disallowable expenses on the other hand are expenses that are charged to the business accounts (P&L account) and are not tax deductable hence tax liability.
Allowable Expenses
1. Contributions to pension schemes
2. Subscriptions to professional bodies
3. Mileage allowances
4. Travel expenses
5. Expenses which employees may incur in relation to employment
6. Capital allowances on plant and machinery
7. Accountancy expenses
8. Advertising
9. Bank charges
10. Computer costs
Disallowed Expenses.
1. Cash payment Exceeding Rs.20000/- in a day,and exceeding Rs.35000/- for payment to Transporter.
2. Payment made for any Agricultural products.
3. Payment made for Fish otr Fish Products.
4. Products for Horticulture.
5. Any Expenses for private purpose, Like Entertaining Customers,Donation to Political parties.
6. Payment of Statutory Penalties.
7. Depreciation.
8. Health Insurance.
9. Any Expenses of Previous year considered in the current Financial year.
We have just run an internal bingo game for all the staff in order to incentivise and increase attendance in our stores. It run in the usual "bingo" way, a number was drawn each day of the week and the first to get a full house wins a one week all expenses holiday for two paid for by the company. The condition was that you needed a pre-determined level of attendance and were not late more than three times. If you didn't meet the conditions, you won gift vouchers and the game played on.
**Allowable and Disallowable Expenses
Allowable Expenditure Disallowable Expenditure**
Staff related costs Not wholly & exclusively incurred for trade
Employers NIC Your own wages, salary or drawings
Insurance The initial cost of buildings
Rents Council tax relating to the private use
Heating, Lighting, Rates of your home
Security Alterations & improvements to business
General maintenance of: premises (Capital Allowances)
business premises and machinery Travel between your home & workplace
Telephone, mobiles Entertaining
Postage, printing Legal fees and fines if you break the law
Trade & professional journals General reserves for bad debts
Car insurance, servicing, repairs The cost of clothes which could be worn
Road fund licence for non-work purposes
Petrol/Diesal Payments to clubs, charities
Parking fees Depreciation
Rail fares, air fares, taxi Capital (Pre-acquisition)
Hotels Gifts to customers- ยฃ15 max
Accommodation & subsistence No food, drink or tobacco unless
Advertising, mailshots conspicuous advertising under certain limits
Accountancy fees Hire charges for expensive cars
Solicitors fees Lease premiums
Professional indemnity insurance Theft by Directors & senior staff
Unrecoverable debts
Interest on business bank loans
Bank charges, credit card charges
Pre-trading expenditure
Use of home as an office
Music cds, videos, dvds
Laundry
Grooming
Christmas parties (Up to certain limits)
Allowable Deductions
Expenses incurred solely for business purposes are generally allowable. This expenditure is
usually referred to as 'Wholly & Exclusively'.
Disallowable Deductions
Expenditure which is not wholly and exclusively intended for trade purposes, is not allowable.
An easier way to remember what is allowable is to use the Tax Return itself. On the Tax Return,
the Inland Revenue lists the items, which should be included as expenditure items.
**Allowable and Dis-allowable expenditure**
--Expenses incurred solely for business purposes are generally allowable. This expenditure is usually referred to as 'Wholly & Exclusively' . Allowable expenditures are allowed to claim as business expenditure under income tax act.
--Expenditure which is not wholly and exclusively intended for trade purposes, is not allowable and called dis allowable expenditure. Dis allowable expenditures are not allowed to claim as business expenditure from the income
In nutshell Allowable expenses are expenses that can be deducted from your income or gain hence no tax liability...Disallowable expenses on the other hand are expenses that are charged to the business accounts (P&L account) and are not tax deductable hence tax liability.
**Allowable Expenses**
1. Contributions to pension schemes
2. Subscriptions to professional bodies
3. Mileage allowances
4. Travel expenses
5. Expenses which employees may incur in relation to employment
6. Capital allowances on plant and machinery
7. Accountancy expenses
8. Advertising
9. Bank charges
10. Computer costs
**Disallowed Expenses.**
1. Cash payment Exceeding Rs.20000/- in a day,and exceeding Rs.35000/- for payment to Transporter.
2. Payment made for any Agricultural products.
3. Payment made for Fish otr Fish Products.
4. Products for Horticulture.
5. Any Expenses for private purpose, Like Entertaining Customers,Donation to Political parties.
6. Payment of Statutory Penalties.
7. Depreciation.
8. Health Insurance.
9. Any Expenses of Previous year considered in the current Financial year.
We have just run an internal bingo game for all the staff in order to incentivise and increase attendance in our stores. It run in the usual "bingo" way, a number was drawn each day of the week and the first to get a full house wins a one week all expenses holiday for two paid for by the company. The condition was that you needed a pre-determined level of attendance and were not late more than three times. If you didn't meet the conditions, you won gift vouchers and the game played on. There was also a booby prize for the person with the least amount of numbers - a trip to the theatre plus a meal. It's just been won by an employee who passed the conditions. My question - which you've probably already guessed...are the cost of the prizes an allowable deduction for corporation tax? Can it be