Dear Greg

Sorry for the late reply. I guess I must check more often.. I agree with you. Section 22(1)(a) allows for no other interpretation. I suspect the learned judge was being a bit broad brush here. Of course you have to consider the current value of every item or at least of every category.

Kind regards

What is your view on paragraph 46 of the Judgement? The judge proposes that writing down inventory on an item-by-item basis is not appropriate as it takes account of the “swings”, but not the “roundabouts”. Given that a company’s inventory taken as a whole is unlikely to be lower than its cost, one ends up in the position where a diminution for purposes of section 22(1) will never (or very rarely) occur. Take for example stock which has been damaged. If one applies the logic of the judge in paragraph 46, one cannot diminish the value of this inventory for purposes of section 22(1) as it comprises but a few item / lines of inventory which, when taken as a whole, is still above cost…

Have I misunderstood his analysis? If not, one can relegate inventory write-downs for tax purposes to history.

Many thanks

Greg