Watermeyer AJP (as he then was), after summarizing the facts in Port Elizabeth Tramway Co Ltd v CIR (CPD 241, 8SATC 13), made reference to the equivalent of section 11(a) and section 23(g) of the 1925 Income Tax Act. He said that these two provisions provide: positively, for what may be deducted in the determination of taxable income, and negatively, for what may not be deducted in the determination of taxable income The two provisions therefore provide two apparent tests for determining what kind of expenditure may be deducted in the determination of taxable income

You are required to explain both the positive and negative tests of the general deduction formula, giving details of the requirements that have to be satisfied before an expense or loss will be deductible in the determination of taxable income. (20 Marks)