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.
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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