Pension contribution after tax

In reading 19 example 6, the company has made an excess contribution of 67 mm before tax and 48 mm after tax to its pension plan. When reclassifying this outflow from CF from operations to CF from financing, they use the after-tax amount of 48 mm.

Why is that? Isn’t cash outflow from financing usually before tax and then deducted from gross profit?


The tax saving is the direct result of the excess contribution, which is a financing activity. Thus, you should reclassify the excess contribution, and you should reclassify the resulting tax effect.