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Warning: These two advertising methods are NOT tax deductible!

by , 21 October 2013
Advertising expenditure is generally deductible provided your business incurred it in the production of income and isn't capital in nature. But, did you know there are certain methods of advertising that aren't deductible? Read on to find out what they are so you can comply with tax law.

'Deductions and allowances – simple words with simple meanings. But, tax legislation has managed to give these simple words the most complex meaning and even greater consequences,' warns the Accounting & Tax Club.

To help you unravel the mystery, find out which two methods of advertising are not deductible.

Revealed: Two methods of advertising are not deductible

#1: Television and radio: According to the Practical Tax Loose Leaf Service, the production costs of an advertisement that'll you'll screen over a long period is of a capital nature and isn't deductible.

On the other hand, the costs may be deductible where the nature of the product only a few screenings made over a short period. In any event, the actual screening costs of such advertisements are deductible.

#2: Permanent structures: Advertising structures that create an enduring benefit or are of a permanent nature may be regarded as being of a capital nature.

For example, a lighting system in a display window that is of a permanent nature, permanent adverts on billboards as well as the erection of a model or a 'dummy' house for the display of goods at the show grounds. This model must be of a permanent nature.

Well there you have it. These two methods of advertising are not deductible. So make sure you comply with tax law.

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