Practical Revision 1 Flashcards
What is a scrapping allowance?
It is the allowance that SARS provides for when an asset is disposed of
Calculated by taking the tax base and subtracting the amount received
What is the basic process to calculate taxable income?
Start with profit before tax
Add/deduct any permanent differences
Add/deduct any temporary differences
Less any assessed losses brought forward
How is an asset dealt with when it is disposed of and taxable income is calculated?
The loss according to accounting is added back and the scrapping allowance is then deducted
How is depreciation dealt with when calculating taxable income?
The depreciation is added back and wear and tear is deducted
What if a cost is relating to a non deductible asset, such as legal fees?
It will,be added back as a permanent difference
What of dividends when calculating taxable income?
They are seen as a permanent difference and deducted
What is the SOFP method for calculating deferred tax?
Using the table
What is done with an assessed loss when calculating deferred tax?
It is seen as a temporary difference and deferred tax is calculated on it
What is the formula for current tax?
Taxable income x current tax rate
How are provisions dealt with when calculating taxable income?
Under temporary differences
The prior year accounting provision is deducted
The current year accounting provision is added back
And then the opposite for tax provisions
