#4954 - Corporation Tax - Business Law and Practice

Corporation tax Calculate the Chargeable Gains 1) Is it a capital asset that is being sold? Capital receipts and expenditure arise from one-off transactions 2) Proceeds of sale of asset / market value of an asset Calculation Total sale proceeds received for sale of asset PS100,000 Sale proceeds includes: 1) Sale of any capital asset 2) The market value of an asset if it is transferred to a connected person for below market value 3) Net sale proceeds Calculation Sale proceeds (2) MINUS Incidental costs of disposal PS100,000 - PS2000 = PS98,000 4) Total chargeable gain Incidental costs of disposal includes: 1) Agent's commission for sale of the asset Calculation Net sale proceeds (3) MINUS initial expenditure MINUS subsequent expenditure PS98,000 - PS8000 and PS20,000 = PS70,000 Initial expenditure includes 1) The initial2) cost [Allowable of the asset expenditure] when purchased 2) Incidental costs of acquisition Subsequent expenditure includes 1) Expenditure on the asset which enhances its value * Doesn't include if the item is damaged and the costs that are incurred repairing it 2) Expenditure incurred in establishing, preserving or defending the title of the asset 5) Indexed gain Calculation Total capital proceeds (4) Minus indexation allowance PS70,000 - PS10,000 = PS60,000 6) Taxable chargeable gain Indexation allowance includes 1) Will be told 2) in [Allowable question expenditure] Calculation Indexed gain (5) Minus losses PS60,000 - PS5,000 = PS55,000 Losses includes Trading losses in this year * Can be applied to capital and trading profits * Can be offset against: a) Profits incurred in THIS accountancy year Unused trading losses b) Profits incurred in the PREVIOUS accountancy year Unused trading losses c) Profits incurred in FUTURE accountancy years Capital losses in this year * Can be applied only to capital profits * Can be offset against: a) Profits incurred in THIS accountancy year Unused trading losses b) Profits incurred in FUTURE accountancy years