I'm getting quite confused when working out corp tax and have hit a wall and as home studying its a bit of a nightmare!
example below
So we have Profit before tax
add back
depreciation,
non trading loans,
donation to charity,
gifts (non allowable)
capital expenditure
etc
Then less
Bank interest
loan interest
Capital allowances
etc
Gives tax adjusted profit.
Then to get to TTP some of the things adjusted above are put back with some other adjustments.
I cant get my head around what I'm doing here, why are we taking things out then putting them straight back afterwards,
For tax adjusted profit non trading items are removed along with non allowable items like depreciation and certain gifts, But I don't understand the movements to get from here to the TTP amount and want to understand it rather than just attempt to memorise which ones I'm moving
Thanks in advance and hopefully that makes sense
Ask the Tutor ACCA TX-UK
corp tax- TTP and tax adjusted profit
It is the tax adjusted TRADING profit that you are firstly computing hence anything that is not an allowable trading expense is added back and anything that is not trading income is removed.
A company is however taxed on its Total Taxable Profit which will include other sources of income like property income and rental income (remember dividend income is exempt corporate tax) and also chargeable gains, so that these items must then be separately included on the Corporation Tax computation using their own relevant basis of assessment.
Hope this helps
You must NOT use old papers from the ACCA website as these have not been updated for the changes in legislation that have taken place since they were written!
You must purchase an exam / revision kit from one of the approved providers and use those questions after you have completed your study of the OT course notes.
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