ACC 113 Lecture Notes - Lecture 9: Tunxis Community College, Capital Cost Allowance, Deferral
6 Jan 2021
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Document Summary
Cra and income tax act (ita) have different views from accounting reporters regarding the categorization of certain expenses. The ita has specific requirements for amortizing the cost of capital assets, cca (capital cost allowance) Exceptions reporting is applied to the taxable income calculation so companies can explain what policies created a discrepancy with the cra corporate income tax form and their f/s. This is when corporations adopt the same accounting practices for both f/r and tax reporting (don"t want to have discrepancies that red flag the cra for an audit) Cra takes a dim view of revenue rec. Evasion is deliberate misstatement, but deferral is minimization/deferral using legitimate accounting policies. If it wants to reduce tax, then the company will adopt policies that: Delay revenue rec. as permitted by the ita. Speed up expense payment that can be deducted for tax purposes. Not every company will use tax min. policies as these will also reduce the reported earnings.
