Tag: Deduction

Deduction denotes, in an income tax context, an item which is subtracted (deducted) in arriving at, and which therefore reduces, taxable income.

South Africa vs. BP Southern Africa (Pty) Ltd, March 2007, Supreme Court of Appeal, Case No 60 / 06, 2007-07

South Africa vs. BP Southern Africa (Pty) Ltd, March 2007, Supreme Court of Appeal, Case No 60 / 06, 2007-07

the Supreme Court of Appeal held that royalty payments are tax deductible in terms of s 11(a) of the Income Tax Act. It accordingly upheld an appeal by BP Southern Africa (Pty) Ltd against a judgment of the Income Tax Special Court. During 1997 BP Southern Africa (Pty) Ltd concluded a written trade mark licence agreement with its parent company BP plc in terms whereof it was granted authorisation to use and display the licensed marks and licensed marketing indicia of the latter against payment of royalties. For the tax years 1997, 1998 and 1999 the royalty fee payments were respectively R 40.190.000, R 45.150.000 and R 42.519.000. BP Southern Africa (Pty) Ltd subsequently claimed those payments as deductions in terms of section 11(a) of the Income Tax Act 58 of 1962 in the determination of its taxable income. The South African Revenue Services disallowed those deductions. BP Southern Africa (Pty) Ltd’s objection to the disallowance was overruled by the ... Continue to full case