Q：
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What kind of deductions are allowable?
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A：
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A taxpayer may claim the allowing allowable deductions in calculating his salaries tax:
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All outgoing and expenses incurred in the production of his assessable income;
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Self-education expenses paid;
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Allowance in respect of capital expenditure on machinery or plant the use of which is essential to the production of his assessable income; and
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Approved charitable donations made.
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Q：
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What is meaning of outgoing and expenses?
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A：
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It means expenses wholly, exclusively and necessarily incurred in the production of the assessable income, other than expenses of a domestic or private nature and capital expenditure.
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Q：
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Other than not being expenditure of a domestic or private or capital nature, are there any other conditions have to be fulfilled?
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A：
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Yes, the expenditure must satisfy each of the following criteria:
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It must have been “incurred”;
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It must have arisen “wholly and exclusively” in the production of the income; and
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It must have been “necessary” in the production of the income.
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Q：
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What is the meaning of “incurred”?
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A：
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In general, for an expense to considered as incurred, it must be an established liability or a definite commitment arising from the year of assessment in which the deduction is claimed.
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Q：
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What is the meaning of “wholly” and “exclusively”?
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A：
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The expenditure incurred was only attributable to the employment. Any part of expense incurred for domestic/private purposes must be apportioned and cannot be claimed as allowable deductions.
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Q：
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How about “necessary”?
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A：
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The word “necessarily” is to be construed as meaning essential to the conduct of the employment. The expenditure is vital to the employment to the extent that it would not be possible for the taxpayer to produce the income form employment without incurring that expenditure.
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FAQ
