I heard some people trying to explain tax value of an asset by talking about profits that every fixed asset should provide to the company directly or indirectly. I understand this concept. You use an electric drill to produce product . Selling the product will provide profit- cash. Taxes will be calculated from this cash. I get all of that but I dont see where the issue of lowering taxbase arises here. Only costs can lower tax base. Revenues do opposite and money received by selling the product is a revenue , not a cost.
-- Edited by rafapak on Sunday 31st of March 2013 05:01:17 PM
Amortisation is a financial accounting concept and nothing to do with the tax for which you would apply capital allowances including the Annual Investment allowanc where applicable.
Always bear in mind that the profits shown in the financial statements are not the profits that are taxed.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Amortisation is a financial accounting concept and nothing to do with the tax for which you would apply capital allowances including the Annual Investment allowanc where applicable.
Always bear in mind that the profits shown in the financial statements are not the profits that are taxed.
kind regards,
Shaun.
thanks for reply shaun. you are right. I just forgot that capital allowances work like an equivalent to accounting amortization rates. Yes, there are profits and expenses that sometimes are and sometimes are not tax issues. Still, do you think you could write a bit more about what proper understanding of a tax value of a fixed asset should be?
its one of those questions that's a little wide. Whole chapters of books, indeed, whole books are dedicated to the tax treatment of fixed assets so I could not possibly hope to do justice to the suject within the confines of a post.
I think better that I direct you to the Opentuition lectures on adjusting profits and Capital allowances.
Its only an introduction to the subject. Here's a link to the index page :
You need to watch the lectures associated with chapter 4 and 5 to answer your questions.
Hope that helps and sure that you appreciate that the question is too large and too fundamental for an adequate response here by way of a post.
kindest regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
its one of those questions that's a little wide. Whole chapters of books, indeed, whole books are dedicated to the tax treatment of fixed assets so I could not possibly hope to do justice to the suject within the confines of a post.
I think better that I direct you to the Opentuition lectures on adjusting profits and Capital allowances.
Its only an introduction to the subject. Here's a link to the index page :
You need to watch the lectures associated with chapter 4 and 5 to answer your questions.
Hope that helps and sure that you appreciate that the question is too large and too fundamental for an adequate response here by way of a post.
kindest regards,
Shaun.
thanks shaun for valuable link
I think you already know that I am asking about stuff related to deferred tax. Yes I want to understand the whole concept but first of all I want to gain good understanding of what tax value and carrying value of an asset is. I want to understand what are the difference between those two. Deferred tax is about temporary differences between those two . First I need to have an understanding of what tax value and carrying value of an asset is.
-- Edited by rafapak on Monday 1st of April 2013 02:07:20 PM
-- Edited by rafapak on Monday 1st of April 2013 03:51:58 PM
