In a recently published judgment handed down by the Supreme Court of Appeal, the court had to consider the interplay between the accrual of income and the ability to claim a deduction in circumstances where trading stock was disposed of by the taxpayer.

The court held that in order to qualify as "trading stock", it was not necessary that what is disposed of is immediately saleable or realisable. It followed that the limitation on claiming a deduction where trading stock is disposed of in excess of the income earned by the taxpayer would be applicable. Taxpayers should therefore be mindful that deductions may be limited where there is a mismatch in income earned in a particular year of assessment.