Podcast
Questions and Answers
Which of the following is true about financial costs?
Which of the following is true about financial costs?
- They can exceed the financial gain and chargeable income from business or investment
- They must be used in the reverse order they are incurred
- They cannot be deducted if they are of a capital nature (correct)
- They can be deducted only if they are of a capital nature
Which of the following is true about research and development expenses?
Which of the following is true about research and development expenses?
- They include expenses included in the cost of an asset (correct)
- They cannot be deducted if they meet the "residual deduction rule"
- They can be carried forward for up to 10 years
- They can be deducted irrespective of whether they are related to business or investment
What is the residual deduction rule?
What is the residual deduction rule?
- A rule that allows for the deduction of research and development expenses
- A rule that limits the deduction of financial costs other than interest
- A rule that allows for the deduction of unused financial cost limitations
- A rule that limits the deduction of research and development expenses (correct)
Study Notes
- Research and development expenses can be deducted if they meet the "residual deduction rule"
- Financial costs other than interest are limited in deduction
- Financial costs cannot exceed the financial gain and 50% of chargeable income from the business or investment
- Unused financial cost limitations can be carried forward for up to 5 years
- Financial costs must be used in the order they are incurred
- Regulations can be made for setting off losses on financial instruments against gains
- Income in Section 16 refers to chargeable income from business or investment
- Financial cost in Section 16 refers to financial cost incurred in business or investment
- Research and development expenses don't include expenses included in the cost of an asset
- Financial costs can be deducted irrespective of whether they are of a capital nature.
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Description
Ready to test your knowledge of tax deductions for research and development expenses and financial costs? This quiz will challenge your understanding of the "residual deduction rule," limitations on financial cost deductions, and regulations for setting off losses on financial instruments against gains. Sharpen your skills on carrying forward unused financial cost limitations and using financial costs in the order they are incurred. Don't forget to keep in mind the definitions of income and financial costs in Section 16, and the exclusion of certain expenses from research and development
