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F_a_i_r123(Enthusiast)Enthusiast
19 Mar 2026

Hi there,


I just left a job and came to new public practice firm. In my previous firm we used to take fines & penalties as business expenses in the financial statement and do reconciliation to add them back on tax form. However, here in the new place I am being said to prepare the financial statement as per tax perspective. For example: if there is business fines then I am being told to put it as loan to Director. I always believed even though expenses such as : entertainment, fines are not deductible but they are always business expenses. I am confused. Can anyone help?


Thanks

125 views
1 replies
125 views
1 replies

All replies

NikkiATO(Community Moderator)Community Moderator
20 Mar 2026

Hi @F_a_i_r123,


You’re correct. Fines, penalties and entertainment can be recorded as business expenses for accounting purposes even though they’re not tax‑deductible.


Posting a fine to a director’s loan is an accounting policy choice, not a tax‑law requirement. Tax law requires that non‑deductible amounts aren’t claimed. It doesn’t prescribe how you must code them in your accounts.


For accounting‑policy specifics, check your firm’s policy, your professional accounting body’s guidance, or speak with a registered tax agent who works with these issues.

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