“In the Production of Income” or Just a Bad Deduction? The Test That Decides
Many expenses look deductible. Many are not. One weak deduction can trigger a NamRA adjustment that unravels an entire return.
1 CPD unit March 16, 2026
What will set you apart
By completing this course you will gain the following competencies
- The real meaning of “in the production of income” in tax law
- The practical application of the close connection test
- How to separate genuine business expenses from non-deductible costs
- Warning signs that a deduction will fail under audit
- Why some expenses that feel business-related are still rejected
- How to structure SME expenses so they remain defensible
- The documentation that strengthens the deductibility of an expense
- How incorrect deductions expose practitioners to professional risk
Event breakdown
- The legal meaning of “in the production of income”
- The close connection test explained in practical terms
- Revenue expenses versus non-deductible expenditure
- Why some business expenses fail the deductibility test
- Common SME deductions that attract scrutiny
- How NamRA evaluates expense claims during audits
- The importance of commercial purpose in deductions
- Documentation required to support expense claims
- Practical checks before allowing a deduction
- Protecting tax returns from avoidable audit adjustments
Category: TaxationType: CPD CourseCPD category: Taxation
Description
Deductible expenses sit at the centre of almost every tax return. Yet the rule that governs them is often misunderstood. For an expense to qualify, it must have a clear and direct connection to the production of income. If that link is weak, the deduction fails. Tax authorities focus heavily on this test during audits because it reveals inflated or incorrectly classified expenses. Many costs appear business related but lack the required connection to income generation. When that happens, the deduction is denied and the tax exposure grows quickly. For practitioners advising SMEs, careful judgment is essential. Understanding how the connection between an expense and income is evaluated helps prevent adjustments, protects the integrity of the return, and reduces the risk of disputes with the tax authority.
You will earn a certificate
On successful completion you will receive a certificate for 1 CPD unit in Taxation.
Requirements
- Laptop, desktop, or mobile device with internet access
- Microsoft Edge, Google Chrome, Safari, or Firefox browser