Deduction

Grieve v CIR
The deduction of the expense is irrelevant to the resulting net profit.

Herald Weekly Times v FCT
The cost of the defamation is paid as damage, it is a cost incurred during the operation of business. Deductiable

CIR v Mitsubishi Motors NZ Ltd
The expense on warranty is deductible, as the cost is incurred at the time of the sale.

Case F24:
The deduction of the expense of keeping a guard dog is 50%, as it has both business and private use.

Case F46:
Band musician’s cloth expenditure is deductable because the cloth is necessary to taxpayer’s occupation as a musician

TRA Case E20:
The dress is a conventional that can be worn by anybody and used in private sector.

Buckley & Young Ltd v CIR:
Restrictive covenant has capital natural and hence is not deductable.

Case G36:
No business has started yet, the cost is merely used to prepare business. Not deductable

Amalgamated Zinc Ltd v FCT:
The compensation to workers is not deductable since the business activity (mining) had terminated already.

Christchurch Press Co v CIR:
Worker’s fee to install the press is regarded as capital and not deductable.

Auckland Gas Co v CIR:
PE pipe replaced. Capital and not deductable.

FCT v Cooper:
Food is private and not deductible since everyone needs to eat.

Budget Rent A Car Ltd v CIR:
Bad debt can be written-off at taxpayer’s discretion

Pacific Rendezvous Ltd v CIR:
The purpose of borrowing money is irrelevant as long as it is used to produce income. Hence the interest is deductable.

TRA Case N63:
The money borrowed must be used to produce income directly. Indirectly is not acceptable since the purpose of borrowing money is irrelevant as long as it is used to produce income. Not deductable.

Case Z6:
Penalties and fines are not deductible

CIR v Lyttelton Port Co:
Demolition of a building is capital expenditure and hence not deductible unless it is damaged by earthquake.

Individual Income

Niasmith v CIR:
Extra sum was employment income because there was a close nexus between employment and payment.

CIR v Kerslake:
“Retention inventive” aka golden handcuff is an income, equivalent to extra pay.

Henwood v CIR:
Restrictive covenant to taxpayer from being associated with other commercials of similar products. Hence it is a capital and not taxable.

CIR v Wattie:
Lease inducements are not income, it is a capital receipt. Hence taxable.

Duff v CIR:
Compensation for income loss is taxable.

Personal Property Sale

AG Healing & Co Ltd v CIR:
Taxpayer received an option to buy the land and resale for profit. Not taxable because during the acquisition the taxpayer has not incurred any positive step in the first place.