QUESTION THREE $[25]$

Mark Abrahams is a partner at a law firm. He is $40$ years old and unmarried. He has incurred a

number of expenses during the $2023$ year of assessment. He would like to know if they are

deductible in the determination of his taxable income. These expenses are as follows:

$$ A local newspaper published the names of what was believed to be a list of members of a

club that was under examination by the police as possibly being a brothel. Much to his shock,

Mark$$s name appeared on the list. He was not a member of the club. He had never been a

member of the club. He had, however, done certain legal work for the owner of the club.

The list was the mailing list of the club, and not the list of its members. In an attempt to

maintain his good reputation in town, he had a local newspaper publish a $$disclaimer$$ that

he had prepared. A large and nice photograph of Mark appeared in the newspaper along

with his $$disclaimer$.$ The cost of this notice that was incurred by him was R$2500.(4)$

$$ In keeping with this image Mark prefers to drive a sports car. On the odd occasion he needs

to call on clients at their homes or at their places of employment. As stated above, he also

completes a certain amount of work in his own home. He has kept fairly accurate records of

his $$business$$ trips and these records reveal that he uses his car $40\%$ of the time for business

travel. The total costs of running the car, including wear and tear on the car, are R$54000$ for

the $2023$ year of assessment. He has admitted that he could have used a cheaper car that

would have been adequate for his business travel. He estimates that by preferring to drive a

sports car his costs of running the car are increased by R$28000$ each year. $(5)$

$$ On $1$ July $2023$ Mark purchased for himself a top of the range $$notebook$$ computer

$($a small and portable computer$)$ at a cash cost of R$16200.$ He takes the $$notebook$$ computer

with him whenever he consults with clients out of the office. He believes that his clients are

most impressed when he is able to access and tailor agreements and other standard

documents during their consultation. He is also fanatical about computer games and because

of the size of the $$notebook$$ computer he is able to play these games on flights and even in

bed. He has estimated that he uses the $$notebook$$ computer $20\%$ of the time for recreational

purposes $($including his computer games$).$ The commissioner has approved a three$-$year

write$-$off period for the $$notebook$$ computer under Interpretation Note $47$ and General Binding

Rule $7.$

Other costs incurred on the $$notebook$$ computer during the $2023$ year of assessment are as

follows:

$-$ Repairs and maintenance of R$1850.$

$-$ Compact disks used solely for storing work documents and agreements of R$2250.$

$-$ Compact disks of computer games of R$1420.(6)$

$$ Joy Rose, the tea lady, was an employee of the firm of attorneys that Mark is a partner of for

many years. She retired at the age of $50$ years during the $2023$ year of assessment. Under a

binding agreement between her and the firm of attorneys, it agreed to award R$12000$ a year

to her for the maintenance of her two minor children, for the next $10$ years. Mark supported

this agreement because Joy had brought him many cups of tea over the years when she had

been employed. He greatly appreciated being served tea by her. The first award of R$12000$

was incurred by the firm of attorneys in the $2023$ year of assessment. $(5)$

$$ John Wick, a newly qualified attorney, is Mark$$s personal assistant. In this role, John has

worked with Mark on some of his biggest cases. John has therefore had access to

confidential client information. John has indicated that he intends to open his own practice.

Mark is concerned that John will use the confidential information he has, to $$steal$$ some of his

clients. As a result, Mark in his personal capacity, paid John R$120000,$ on $1$ July $2023,$ in

return for John agreeing not to open his own practice for a period of four years, commencing

on $1$ March $2023.(5)$

Required:

Discuss whether Mark will be entitled to a deduction, or a capital allowance, in the

determination of his taxable income for the expenses he incurred as detailed above.