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corp tax- TTP and tax adjusted profit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › corp tax- TTP and tax adjusted profit

  • This topic has 3 replies, 3 voices, and was last updated 6 years ago by Tax Tutor.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • April 7, 2016 at 1:41 pm #309232
    osborne88
    Member
    • Topics: 2
    • Replies: 14
    • ☆

    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

    April 8, 2016 at 1:33 pm #309314
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    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

    April 12, 2016 at 11:35 pm #309942
    Derrica Watson
    Participant
    • Topics: 0
    • Replies: 1
    • ☆

    can I get some clarity on this problem
    https://www.chinaacc.com/upload/html/2013/07/01/lixingcune82cb98e7a854ecd8abdbb329310fc93.pdf
    I saw the answers but don’t understand where the 40000 is coming from in 2010 in the loss memo and for the working for 2007 why is it 18200 and why take 50000-31800 to get the answer.

    April 16, 2016 at 11:17 am #310349
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    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.

  • Author
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