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Chapter 6 – example 5

Forums › ACCA Forums › ACCA TX Taxation Forums › Chapter 6 – example 5

  • This topic has 3 replies, 2 voices, and was last updated 4 years ago by f6ali.
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  • September 15, 2018 at 2:01 pm #474657
    racucamelia
    Member
    • Topics: 34
    • Replies: 39
    • ☆☆

    Hi,

    can you, please, be kind, and clarify why in the example 5 we take only the 4 month profit and we deduct the overlap profit from it and in the example worked in the video we take the profit from last tax year + the 4 month profit until 31.01.2018 and then we deduct the overlap profit.

    What I am calculation wrong at the last tax year period?

    Thanks

    September 15, 2018 at 2:20 pm #474659
    f6ali
    Member
    • Topics: 10
    • Replies: 342
    • ☆☆☆

    Basic rule is that, if last complete accounting period end date and business cessation date fall in the same tax year, then profits will be combined & then tax will be calculated. However, if last complete accounting period end date & business cessation date fall in different tax years, then the periods will be taxed differently.

    For the example you are referring to, i guess the dates will be some what like these:

    Example 5:
    Last complete accounting period end date = 31 Jan 2017
    Business cessation date = 31 May 2017
    The dates fall in different tax years, hence taxed separately.

    Worked Example:
    Last complete accounting period end date = 31 Sep 2017
    Business cessation date = 31 Jan 2018
    The dates fall in the same tax year, hence taxed together.

    September 16, 2018 at 8:24 am #474729
    racucamelia
    Member
    • Topics: 34
    • Replies: 39
    • ☆☆

    Thank you very much for the answer. Much clear now

    September 16, 2018 at 1:57 pm #474748
    f6ali
    Member
    • Topics: 10
    • Replies: 342
    • ☆☆☆

    You are welcome 🙂

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