The tax incentives have an annual business spend requirement. What constitutes Business Spend?
Generally, business spend refers to expenses which are wholly and exclusively incurred in the production of income:
- The expenses are solely incurred in the production of income.
- The expenses are not a contingent liability i.e. they do not depend on an event that may or may not occur in the future. In other words, the expenses must be incurred. An expense is 'incurred' when the legal liability to pay the expense arises, regardless of the date of actual payment of the money.
- The expenses are revenue, and not capital, in nature.
- The expenses are not prohibited from deduction under the Income Tax Act.