Can fines, penalties, damages or questionable payments ever qualify for a tax deduction? This webinar examines SARS Interpretation Note 54 (Issue 3) and the application of section 23(o). Delegates will learn to identify prohibited deductions, distinguish commercial penalties from unlawful penalties, and understand the evidentiary burden placed on taxpayers.
This practical webinar unpacks the tax treatment of expenditure connected to corrupt activities, unlawful conduct, fines, penalties, compensation, damages, and fruitless and wasteful expenditure. Using the principles and examples contained in Interpretation Note 54 (Issue 3), we will examine when section 23(o) permanently prohibits a deduction and when expenditure may still be considered under the ordinary deduction rules in section 11(a), read with section 23(g). The session will also explain the taxpayer’s burden of proof and the records needed to support a deduction.
Key Topics
• The purpose and scope of section 23(o)
• Interaction between sections 11(a), 23(g) and 23(o)
• Payments, agreements and offers relating to corrupt activities
• The broad meaning of “gratification” under PRECCA
• Why a criminal conviction is not required for section 23(o) to apply
• Fines and penalties arising from unlawful activities
• Treatment of foreign fines and penalties
• Commercial penalties falling outside section 23(o)
• Distinguishing fines and penalties from compensation and damages
• Fruitless and wasteful expenditure under the PFMA
• Recovery of previously disallowed fruitless and wasteful expenditure
• The taxpayer’s burden of proof and supporting documentation
• Practical examples illustrating deductible and prohibited expenditure
• Tax practitioners and advisers
• Accountants and financial managers
• Registered auditors and audit staff
• Public-sector finance professionals
• Accounting officers and accounting authorities
• Compliance, governance and risk professionals
• Legal advisers
• Business owners and senior management
• Professionals responsible for tax returns and assessing deductible expenditure
