08 Profit computation Basis period losses & Partnership 2014

Preceding 20 example q ltd commenced business 10 years

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Unformatted text preview: losses of $100,000 b/f to the YA 2011/12. Its assessable profit for the YA 2011/12 was Its $80,000. $80,000. The computation of its profits tax liability for The YA 2011/12 (final) & YA 2012/13 (provisional) will be as follows: (provisional) 21 2011/12 (Final) Assessable profit Less: Loss b/f Less: Loss c/f to YA 2012/13 Loss Net assessable profit Net Profits tax for YA 2011/12 $80,000 (100,000) (100,000) (20,000) Nil Nil Nil 2012/13 (Provisional) Assessable profit of preceding year $80,000 Assessable Less: Loss b/f (20,000) Less: (20,000) Net provisional profit 60,000 Net 60,000 Provisional profits tax for YA 2012/13 $60,000 x 16.5% 9,900 Total tax payable 9,900 9,900 22 Hold-over of Payment of Hold-over Provisional Profits Tax Provisional If a taxpayer considers that the amount of estimated If provisional tax is excessive, he can lodge a written claim with the CIR for holding over the whole or part of the payment of provisional profits tax not later than: of 28 days before the due date for payment of provisional tax, or provisional 14 days after the date of the notice for payment of provisional tax, provisional whichever is the later (s 63J(1)). whichever the 23 Grounds for applying holdover The application for holding-over will not be valid unless it contains at The least one of the following grounds (s 63J): grounds 1. the assessable profits for the YA are likely to be less than 90 % 1. 90 of: the assessable profits for the preceding YA, or the the estimated provisional profit 2. the amount of loss b/f has not been set-off or is incorrect 2. loss 3. the person assessed: 3. has ceased business or has ceased will before the end of the YA cease business, & the assessable profits are likely to be less than the the assessable profits for the preceding YA, or the the estimated provisional profit. the 4. the person assessed has elected to be personally assessed for that personally YA & that such election is likely to reduce his liability to tax or 5. the person assessed has validly objected to his assessment to 24 profits tax for the preceding YA profits Basis of computation Year of Assessment (Y/A) Year = 12 months period commencing on 1 April and ended on 31 March of next year ended e.g. 1 April 2001 to 31 March 2002, Y/A is 2001/02 Basis Period (B.P.) Basis = period on income or profits of which tax for that year ultimately falls to be computed. B.P. for both salaries tax and property tax are from 1 April B.P. to 31 March of next year to B.P. for profits tax is the same as the accounting period 25 Profits Tax (basis of computation) Y/A = Y/A which accounting year end date fall into B.P. = accounting period e.g.: accounting period: 1 May 2006 to 30 April 2007 accounting Y/A= 2007/08: Apr 1, 2007 to Mar 31, 2008 B.P.= 1 May 2006 to 30 April 2007 26 Commencement Date s.18C The date of commencement of business depends The on the nature of the trading activities. For a merchandising business, the date of commencement may be the date of the first sale, while for a man...
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