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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)
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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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