Taxable profit (tax loss)
It is the basis for determining current income tax payable or recoverable, subject to applicable tax law and reliefs. It can differ from accounting profit because tax law may recognise income, expenses or deductions in different periods or not at all. Temporary differences and eligible unused tax losses may also affect deferred tax, subject to recognition conditions.
Worked example
Accounting profit is $100,000; an expense of $10,000 is permanently non-deductible and there are no other adjustments. Taxable profit is $110,000 and current tax at 20% is $22,000.
Common mistake
Applying the tax rate to accounting profit without checking tax adjustments, or assuming all tax losses automatically create a recognised deferred tax asset.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |