Taxation on provision

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Finance
4592 Points Posted on 17 May 2023

Hi

A mine and accident happened injuring 20 worksmen. When the mine started a provision was created

Dr.MINE

DR. DECOMISSIONING PROVISION

then after the accident I have altered it to

DR. DECOMMISSIONING PROVISION

CR. ACCIDENT PROVISION 

dont you think there is there is a problem here because the asset value is left inflated? Yes but the mine is not working now and no need for that provision.

So under what section is a provision expense taxable. 

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On 17 May 2023 at 07:00 Report
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Finance/Compliance Consultant
69413 Points Posted on 04 July 2026

Summary: Provisions for future costs, such as mine decommissioning or potential accident claims, are not deductible under the Income Tax Act until the actual expense is incurred. In your tax filing, you must add back these provisions to your profit and calculate depreciation based only on the actual cost of the assets, excluding any contingent liability amounts.

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On 04 July 2026 at 09:37

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