BU397 Lecture Notes - Lecture 4: Canada Revenue Agency, Income Statement, Financial Statement
Document Summary
Income taxes from business perspective: a major consideration for new companies is the tax rate that will be paid on its profits, corporations file income tax returns that are administered by the canada. The purpose is to raise money to support government operations. Accounting and taxable income: accounting income (or profit) is a pre-tax concept. Objective is to provide useful information to users of the financial statements: taxable income is a tax accounting term. Determined according to the income tax act and regulations. Used to determine income tax payable: therefore, accounting income taxable income, to determine taxable income, companies prepare a reconciliation of accounting income to taxable income: Taxable income: taxable income current tax rate = taxes payable and current income tax expense. Permanent differences: differences between ita and accounting standards that can never reconcile themselves (e. g. cost of dinner for client is completely deductible, but only 50% deductible for tax purposes)
