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Wording problem

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Wording problem

  • This topic has 4 replies, 2 voices, and was last updated 4 months ago by Tax Tutor.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • February 17, 2022 at 7:26 pm #648836
    Noorshadab
    • Topics: 3
    • Replies: 3
    • ☆

    Hello Sir. I get comfused with the wording when solving TX queations. For example, the books says that XYZ expense is allowable deduction and this is why I dedcut it from the profit but when I look at the answer the book has put zero instead of deducting it as if it is an exampt benfit. I would kindly ask you to let me know the meaning of the following terms:

    Allowable
    deductable
    exempt

    February 18, 2022 at 4:48 pm #648880
    Tax Tutor
    • Topics: 2
    • Replies: 3929
    • ☆☆☆☆☆

    From what you have said I do not think you have understood the concept of adjustment of trading profits – we are not producing a new taxation statement of profit or loss – we are adjusting the accounting net profit to make it acceptable for tax purposes
    If an expense is allowable and it has been deducted in computing the accounting profit then there is NO adjustment required! If an expense is not allowable then we will add it back to the accounting profit.
    Have you worked through the lectures?

    February 18, 2022 at 7:55 pm #648885
    Noorshadab
    • Topics: 3
    • Replies: 3
    • ☆

    Yes sir. I have been through your lectures and I think i understand the concept of adjusting trading profits. I got confused when i did corporate taxation. Impaired trade debt. Where it says allowable deductiin but does not deduct it. . I will put it this way.

    I would like to understand the difference between the two terms. tax allowable and tax deductable.

    Thank you sir for the reply.

    February 20, 2022 at 7:31 am #648929
    Noorshadab
    • Topics: 3
    • Replies: 3
    • ☆

    I would appreciate response amd help from anybody regarding the problem above

    February 20, 2022 at 12:08 pm #648972
    Tax Tutor
    • Topics: 2
    • Replies: 3929
    • ☆☆☆☆☆

    There is no difference between the terms – tax allowable expense and tax deductible expense.
    I repeat my original answer above – please read it carefully – the accounting net profit has already been reduced by the expenses in the statement of profit or loss – if they are allowable expenses there is NO adjustment required – you do not deduct the expense again!
    If the expense is not allowable then it must be added back to the accounting profit.

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