Section 32: Expenses of deriving income.

(1) In this section, “allowable loss” means the amount by which a taxpayer's allowable deductions exceed thetaxpayer’s assessable income for the year of assessment. (2) For the purpose of ascertaining the chargeable income derived by a taxpayer during a year of assessment, there shall be deducted— a) all outgoings and expenses incurred by the taxpayer during the year of assessment to the extent that expenses or outgoings were incurred in the production of assessable income; b) any allowable loss suffered by the taxpayer to the extent that the loss has not been deducted in a previous year of assessment in-so-far as the tax payable each year will be less than 50% of the tax due if such loss is not carried forward; and c) losses suffered on the disposal of business assets other than trading stock as determined in accordance with sections 57 and 61. (3) No deduction is allowed under subsection (2) for— a) any outgoing or expense to the extent that it is personal to the taxpayer; b) an amount that is included in the adjusted cost base of an asset; c) income tax paid or incurred to Sierra Leone or to a foreign country; d) any contribution to a non-complying pension, superannuation, provident or similar fund or to a complying fund in excess of the limit prescribed in section 38; e) any sums paid in respect of redundancy, loss of office, termination of the holding of an office or retirement and any like sum in excess of the limit prescribed in paragraph 2 of the Ninth Schedule, except to the extent that it has been taxed as employment income; f) any gratuity paid to an employee past, present or future or to a dependant of an employee except to the extent that it has been taxed as employment income; g) expenses, except cost of travel to attend board meetings incurred by a company in respect of transport to or from any place outside or inside Sierra Leone of a director of the company or his dependants, other than those of a whole-time service director; h) subject to sections 33 and 4 1, expenses incurred to repair, renew, alter or improve property; i) subject to section 34, expenses incurred to provide meals, refreshment or entertainment. j) subject to section 35, interest expenses incurred by a taxpayer that is not a bank; k) subject to section 36, losses in respect of bad debt claims; l) subject to section 37, research and development costs; m) subject to section 38, any part of the cost of acquiring a right to receive pension or annuity payments; n) subject to section 42, expenses incurred to acquire mineral and petroleum exploration and production rights and expenses incurred in respect of mineral and petroleum development; o) subject to section 43, expenses incurred in starting up a business to produce assessable income; p) subject to section 44, expenses incurred in acquiring an interest in a business; q) subject to section 54, expenses incurred to acquire trading stock or raw materials to be incorporated into trading stock; r) the cost of a gift made directly or indirectly to an individual if the gift is excludable from the individual's assessable income; or s) a fine or similar penalty paid to a government for breach of any law. (4) In this section an outgoing or expense treated as personal to the taxpayer includes— a) the cost of commuting between a taxpayer's residence and work; b) the cost of clothing that is suitable for wearing outside work; c) the cost of caring for dependants; and d) the cost of education in such areas of study as the Minister may, after consultation with the Minister for the time being responsible for Education by statutory instrument determine; Expenses incurred to derive rental income from real property.