Schedule D ? Case I and II
Scope
Case I: Tax adjusted Profits of a self-employed trader.
Case II: Tax adjusted Profits of a self-employed professional.
Basis of Assessment
Profits from the accounts done in 2005 are taxed in 2005. The accounts must be for a twelve-month period.
Calculating Case I and II Profit
There are three steps to work out a businessperson's taxable Case I and II profit. They are:
1. Start of with the net profit/loss for the profit and loss account.
2. Add back any expenses, which are not allowable.
3. Subtract any incomes that are not taxable under case I and II. E.g. rental income.
Treatment of Expenses
Expense: Add back Do Not Add back
¨ Any expense that is wholly and exclusively for the business P
¨ Expenses not for the business P
¨ Owners drawing/salary ? anything owner takes for private use P
¨ Political/charitable donations P
¨ Any expense incurred for the employees P
¨ Capital expenditure ? costs associated with buying/improving fixed assets P
¨ Depreciation P
¨ Repairs to fixed assets P
¨ Bad debts P
¨ Increase in general pro ...