Are these same? Following uses these two terms and I am not sure if denominator is representing the same rate. Effective tax rate = income tax expense / Pre Tax Income Income tax rate = Tax Paid (or payable) / Taxable Income
pretax income = income subject to tax on GAAP financial statements taxable income = income subject to tax on IRS filings
Where does Taxable Income appear? Or is it seen purely on internal documents only?
Not exactly.
It’s income _ before _ taxes, but not necessarily income subject to tax.
For example, interest received from municipal bonds would be part of pretax income, but it’s not subject to income tax.
On your income tax return.
Not on any financial statements (income statement, balance sheet, cash flow statement).
What about interest tax deduction on debt, that goes on the income statement? If so where exactly, I haven’t seen any mention of this anywhere to date.
Between EBIT and EBT.
According to investopedia, utilities and financial services companies have the highest debt to equity ratios and wholesalers have the lowest. I figured those would be the best companies to review and compare in order to find this tax deduction, but after reviewing:
http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_COST_2017.pdf
http://jemena.com.au/documents/reports/financial-statements-for-the-year-ended-31-decembe.aspx
http://www.annualreports.com/HostedData/AnnualReportArchive/W/ASX_WPL_2015.PDF
I wasn’t able to find any mention of interest tax deductions - not in the income statement or the notes :(. Everyone must be labeling interest tax deductions as something really sneaky.
I think I found it, I think it’s masked under ‘finance costs’. Well at least I found them for 2 companies, still looking at the other two. Not obvious. But yes at least for those two they were between EBIT and EBT.