Section BD 4 — Income Tax Act 2007: Allocation of deductions to particular income years

BD 4 Allocation of deductions to particular income years Application (1) Every deduction must be allocated to an income year under this section. General rule (2) A deduction for an amount of expenditure or loss is allocated to the income year in which the expenditure or loss is incurred, unless a provision in any of Parts D to I provides for allocation on another basis. Interpretation of incur (3) When the time of incurrence of an amount of expenditure or loss is being determined, regard must be had to case law, which— (a) requires some people to recognise expenditure or loss on an accrual basis; and (b) requires other people to recognise expenditure or loss on a cash basis; and (c) more generally, defines the concept of incurrence. Role of Part E (4) Part E (Timing and quantifying rules) contains a number of provisions that— (a) specifically modify the allocation of deductions or have the effect of modifying the allocation of deductions; or (b) allocate deductions as part of the process of quantifying them. Allocation (5) If an expenditure or loss gives rise to more than 1 deduction, the deductions are allocated to income years to the extent that their total is no more than the amount of the expenditure or loss. Defined in this Act: amount , deduction , income year , loss , Compare: 2004 No 35 s BD 4