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of <h1>Income Recovery and Trading Liability Cessation Under Section 41(1) of the Income Tax Act Explained</h1> Section 41(1) of the Income Tax Act addresses the recovery of expenditure and the remission or cessation of trading liabilities. If a previously deducted loss or expenditure is recovered, it is considered income in the year of recovery, regardless of the business's existence. Similarly, if a trading liability is remitted or ceases, it is also deemed income in that year. This applies even if the liability is unilaterally written off. Successors in business, due to amalgamation or other changes, are also taxed on recovered amounts related to prior deductions. The section excludes mistaken payments or calculation errors and does not apply to loan waivers.
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