According to Act 896, the Commissioner-General shall not allow a deduction in respect of domestic expenditure and excluded expenditure incurred by a person.
Required:
Explain what constitutes domestic expenditure and excluded expenditure in line with the provisions in the Income Tax Act, 2015 (Act 896). (10 marks)

  1. Domestic Expenditure
    Domestic expenditure refers to costs incurred by an individual for personal or household maintenance. It includes:
  • Expenses for maintaining the individual, such as shelter, meals, entertainment, or other leisure activities.
  • Commuting costs from home to work.
  • The cost of clothing, except for specific work uniforms that are not suitable for wearing outside of work.
  • Educational expenses not directly relevant to the individual’s business or education that does not lead to a degree or diploma​.
  1. Excluded Expenditure
    Excluded expenditure refers to costs that are not deductible under the tax laws, including:
  • Taxes payable under the Income Tax Act.
  • Bribes and corrupt practices.
  • Fines, penalties, or interest for breaching any laws.
  • Expenses related to exempt income or final withholding payments.
  • Contributions to retirement funds, unless they are included in an employee’s taxable income.
  • Dividends of a company