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Income Tax (Trading and Other Income) Act 2005

Section 57: Pre-trading expenses

236.This section gives relief for expenses incurred before a trade starts. It is based on section 401(1) of ICTA.

237.Originally section 401 of ICTA gave relief by creating a loss for the tax year in which the expense was incurred. It was amended to allow the expense as a deduction on the first day of trading.

238.Subsection (1) sets the scene. Consistent with other rules in this Part, it refers to the “date” on which (instead of the “time” when) a person starts to trade.

239.Subsection (2) identifies the expenses that are allowed by the section. They are expenses that would be allowable if incurred after the start of the trade.

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