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I referred to the answers to question one of F6 past question “June 2011”. Why is it that the £3600 Interest from government stocks (gilts) was not grossed up before tax calculation? And why is the tax suffered at source to that regard not deducted from the total tax liability?
Your help will be highly appreciated.
Thanks.
Ogo
Hi Ogo
It is advisable to ensure that you have worked through the OT course notes and examples before attempting past exam questions. If you read note 3.2 on page 7 you will see that such interest is paid GROSS and therefore there is no tax suffered at source! I would also advise that you only look at past exam questions that have been updated for the Finance Act 2012 relevant for this year’s exams. If you are using the ACCA website for the past exams then DON’T as these have not been updated for the changes in legislation that have occurred. You will need to acquire an Exam Revision Kit from one of the ACCA approved suppliers for the updated Q’s & A’s.
Hope this helpsTax Tutor,
A lot of thanks for your reply… I really appreciate it… I’ve worked through the OT course notes and examples already, from my understanding, whenever interest is paid Gross, there is no tax suffered at source otherwise, it suffers 20% interest at source.. But in the question ( question one of F6 past question “June 2011) note 3.2 on page 7, it’s stated that £3600 is the actual cash amounts that will be received… of which there should be tax at source according to the tax rules…… I’m kind of confuse here.
Please throw more light on that, if you don’t mind.
Thanks,
Ogo
Hi Ogo I hope you have realised now that the interest received is RECEIVED GROSS and there is therefore NO tax deducted at source to take account of!! The taxpayer is assessed on the gross figure and the figure of cash received IS the gross figure to include within the Income Tax Computation.
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