Expenses (deductions) are deemed to have a direct connection with the business to the extent that they:

1. Wholly relate to the production of income: The expense should be incurred entirely for the purpose of producing income from the business during the year.
2. Exclusively for the purpose of the business: The expense must be strictly for business operations and not for personal or other unrelated purposes.
3. Necessarily incurred: The expense must be compulsory and unavoidable in the conduct of the business. Without the expense, the business cannot operate effectively.
4. Not of a capital nature: The expense should not result in acquiring a long-term asset or securing a benefit that lasts for more than 12 months