Annex 1: Minor changes in the law made by the Act: Change 43: Ministers of religion: deductions to be allowed in calculating profits of profession or vocation: section 159
This change extends the way in which deductions are allowed by section 332(3) of ICTA.
Section 332(3) of ICTA allows deductions from any profits, which may mean particular income receipts. It is more logical for the deductions to be made in calculating the profits of the profession or vocation, in line with the other calculating rules in Part 2 of this Act. It will no longer be arguable that a taxpayer has to match the deductions against a particular income receipt.
This allows a deduction in calculating the profits of the profession or vocation instead of requiring the taxpayer to set a deduction against a particular receipt.
Section 332(3)(c) of ICTA refers to expenses “borne” by the taxpayer. It is more logical for the deductions to be made when the taxpayer incurs the expenses, in line with other deduction rules in Part 2 of this Act. The effect of this is that a deduction may be available earlier than it is under the ICTA rule.
This change is in taxpayers' favour in principle and may benefit some in practice. But the numbers affected and the amounts involved are likely to be small.