HTAX:

Woof Woof (Pty) Limited (Woof Woof) manufactures dog biscuits and other dog treats. The companys 2023 year of assessment ends on 28 February 2023. It is Woof Woofs policy to present watches to Woof Woofs employees on the completion of 10 years of unbroken service to the company. Towards the end of Woof Woofs 2023 year of assessment five (5) employees qualified for watches. Woof Woof accordingly ordered five (5) watches at R6 000 each. The jeweller offered these five (5) watches at a discount of 15% if Woof Woof purchased 15 watches. Woof Woof will need additional watches in its 2024 and 2025 years of assessment, Woof Woof took up the special offer and paid R76 500 (15 watches at R5 100 each) to the jeweller on 31 January 2023.

Discuss if the expense of R76 500 may be deducted in the determination of Woof Woof (Pty) Limiteds taxable income for the 2023 year of assessment. Support your answer with references to the Income Tax Act.