The CIMA Learning System xvii
Acknowledgements xvii
How to use the CIMA Learning System xvii
Study technique xix
Financial Accounting and Tax
... [Show More] Principles xxi
1 Principles of Business Taxation – Introduction 1
Learning Outcomes 1
1.1 Introduction 1
1.2 Taxation as a source of government revenue 2
1.3 Principles of taxation 2
1.3.1 Canons of taxation 2
1.3.2 The American Institute of Certified Public Accountants’ (AICPA)
statement – Guiding Principles of Good Tax Policy: A Framework
for Evaluating Tax Proposals 3
1.4 Basic tax terminology 3
1.4.1 Direct taxes 3
1.4.2 Indirect taxes 4
1.4.3 Incidence 4
1.4.4 Taxable person 4
1.4.5 Competent jurisdiction 4
1.4.6 Hypothecation 5
1.4.7 Withholding responsibilities 5
1.4.8 Tax rate structure 5
1.4.9 The tax gap 6
1.5 Tax bases and classification of taxes 6
1.6 Sources of tax rules 6
1.7 Summary 8
Revision Questions 9
Solutions to Revision Questions 11
2 Direct Taxes on an Entity’s Profits and Gains 13
Learning Outcome 13
2.1 Introduction 13
2.2 The corporate tax base 14
2.2.1 Schedular systems of corporate taxation 14
2.2.2 Classification of income 15
2.2.3 Expenditure 16
2.2.4 Capital gains 19
2.3 Nominal corporate tax rates 21
2006.1
Contents
iii
2.4 The interaction of the corporate tax system with the personal tax system 21
2.4.1 Classical system 21
2.4.2 Imputation system 21
2.4.3 Partial imputation system 22
2.4.4 Split rate systems 22
2.4.5 Examples to illustrate the difference between traditional
and imputation systems 22
2.5 Rules recharacterising interest as dividends 23
2.6 Treatment of losses 23
2.6.1 Trading losses 23
2.6.2 Capital losses 23
2.6.3 Cessation of business 24
2.7 The concept of tax consolidation 24
2.7.1 Capital losses and tax groups 25
2.8 Summary 25
Revision Questions 27
Solutions to Revision Questions 31
3 Indirect Taxes and Employee Taxation 33
Learning Outcome 33
3.1 Introduction 33
3.2 Indirect taxes collected by the entity 34
3.2.1 Unit taxes and ad valorem taxes 34
3.3 Consumption taxes 34
3.3.1 Single-stage sales taxes 34
3.3.2 Multi-stage sales taxes 34
3.4 Value-added tax (VAT) 35
3.4.1 Transactions liable to VAT 36
3.5 Indirect taxes paid by the entity 38
3.5.1 Excise duties 38
3.5.2 Property taxes 38
3.5.3 Wealth taxes 38
3.6 Employee taxation 39
3.6.1 The employee as a separate taxable person subject to a personal income
tax regime 39
3.6.2 Social security contributions 40
3.6.3 Other payroll taxes 41
3.7 Use of employer reporting and withholding to ensure compliance
and assist tax collection 41
3.8 Summary 41
Revision Questions 43
Solutions to Revision Questions 45
4 Administration of Taxation 47
Learning Outcomes 47
4.1 Introduction [Show Less]