General deductions under SARS and section 11(a).

The tests practitioners actually run

Section 11(a) allows, in determining taxable income from carrying on a trade, expenditure and losses actually incurred in the production of the income, provided they are not of a capital nature. Read against section 23(g), the amount must have been laid out for the purposes of trade. In practice the questions are:

1. Trade. The opening words of section 11 limit the deduction to income from carrying on a trade. A passive holding with no trade does not unlock section 11(a).
2. Expenditure or a loss. There must be a real outgoing or a loss, not a book entry on its own.
3. Actually incurred. A liability must have been incurred in that year of assessment. An expected future cost, or a provision that is not yet a liability, is not incurred merely because it is probable.
4. In the production of the income. The expense must be linked closely enough to earning the income. That link is case law. Do not treat a loose “it helped the business” sentence as the test.
5. Not of a capital nature. The cost of creating or improving an enduring income-earning structure is capital. The cost of working that structure is more often revenue. Which side a payment falls on depends on the facts and the cases, not on the invoice description.
6. For the purposes of trade. Section 23(g) denies a deduction to the extent the money was not laid out for trade. Mixed private and trade expenditure is apportioned. The private portion is out.

Section 23 also prohibits domestic or private expenditure. A deduction that fails any one of these is not saved by the fact that the bank statement shows a payment.

When section 11(a) is the wrong starting point

Many amounts people call “deductions” are specific provisions. Quoting section 11(a) at them is a research error.

• Repairs of property occupied for the purposes of trade are section 11(d). An improvement is a different enquiry, and it is often capital.
• Wear and tear on a qualifying asset used for trade is the section 11(e) allowance, read with the SARS guidance on that allowance. It is not a full write-off under section 11(a) in the year of purchase.
• Legal costs are section 11(c), which is narrower than “any lawyer’s invoice”.
• Bad debts are section 11(i). An allowance for doubtful debts is section 11(j), and it has its own conditions.
• Expenditure paid in advance can be limited by section 23H even where section 11(a) would otherwise allow it.
• Donations to an approved public benefit organisation are section 18A. They are not a general deduction, and they are capped.
• Retirement-fund contributions are a specific deduction under section 11F.
• Medical scheme fees and additional medical expenses are tax credits under section 6A and section 6B. They reduce tax. They are not section 11(a) deductions.
• Travel, subsistence, and home office follow their own provisions and SARS practice. They are not automatic general deductions.

Where the cases do the work

“In the production of the income” and “not of a capital nature” are not checklists SARS publishes as a yes/no form. They are legal tests filled in by the judgments. A one-line answer that skips the facts — once-off or recurring, enduring benefit, closeness to the income — is not research. Ask Taxbot on Reasoning when the question needs both the section and the cases, then open the judgments it cites.

The consolidated Act and the SARS notes move. Confirm the wording for the year of assessment you are in. The Act index is on SARS primary legislation.

Primary sources and judgments to check

Start with the wording of the Income Tax Act on SARS's primary-legislation page for the relevant year of assessment. SARS's Taxation in South Africa (2025) summarises the general deduction formula at section 2.4.7. SARS says its income-tax guides are explanatory and not binding; check the Act and judgments for the legal position.

• Taxpayer MIR v Commissioner for SARS [2024] ZATC 10 sets out a six-element formulation of sections 11(a) and 23(g) and considers advance payments, capital character and timing. It is a Tax Court decision on its facts; use it as a research lead and check later authority.
• GB Mining and Exploration SA (Pty) Ltd v Commissioner for SARS [2014] ZASCA 29 discusses the capital-versus-revenue enquiry, including whether expenditure relates to income-earning operations or to establishing or improving the income-earning structure.

These decisions do not decide whether a different taxpayer's expense qualifies. Read the full judgment, identify the material facts and procedural history, and check whether later cases or amendments affect the point.

Page updated 29 September 2026. This guide is a research aid, not tax or legal advice. Check the law applying to the relevant year of assessment and the facts of the particular expense.

Common questions