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- June 29, 2018 at 12:28 pm #460530
Hello!
“Having adjusted the trading profit of the accounting period and computed and deducted the capital allowances for this period the tax adjusted trading profit must now be included in the Income Tax Computation for the relevant Tax Year of assessment.”
1. I’am a bit confused here. What comes first?
Calculation of the adjusted trading profit, then then identifying in which the tax year it will be assessed or vice-versa?Thanks
June 29, 2018 at 4:14 pm #460550An income tax computation is prepared for a tax year (6 April to 5 April) and must include all income taxable in that tax year.
Each source of income has its own basis of assessment – the method by which we relate that income to the tax year in which it will be charged to tax – just as we have an accruals basis of accounting to relate the relevant transactions to the correct statement of profit or loss.
If an individual prepares accounts to 31 December in each year and you want to know which accounting period ‘s profit (once it has been adjusted for tax purposes) will be assessed in the tax year 2017/18 then using CYB as discussed in answer to your previous question – we will assess the accounting year ended 31 December 2017 as this date ends in the tax year 2017/18.
If you want to know in which tax year will the adjusted profits of the accounting year ended 31 December 2017 be assessed – then as 31 December 2017 falls in the 2017/18 tax year it will be the income tax computation for that tax year where it will appear. - AuthorPosts
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