Deductions, in the context of taxation, refer to specific expenses or allowances that can be subtracted from an individual’s or a company’s assessable income to arrive at their chargeable income. These deductions are typically permitted by tax authorities as a means to account for certain expenses incurred in generating income or to provide relief for specific circumstances.
For individuals, deductions might include expenses related to employment, education, donations to approved charities, medical expenses, and contributions to retirement savings schemes, among others.
For companies, deductions often include allowable business expenses such as rent, utilities, salaries, and wages, depreciation of assets, contributions to employee provident funds, and certain business-related taxes.
The availability and extent of deductions can vary based on tax laws and regulations in a particular jurisdiction. Taxpayers are usually required to provide documentation or evidence to support their claims for deductions when filing their tax returns.