Questions about Taxation

[tingie71]

Would someone be generous enough to help on the following questions? Many thanks!

• Is tax loss carryforward going to be an amount to deduct from “pretax income” or “taxable income”?

• Based on my understand, if the accounting standards adopt a fast depreciation of assets, the carrying value is lower than the tax base. That means higher depreciation expenses have been released to income statemente, and resulting in lower net income, and thus, lower income tax expenses than tax payable, in previous years. That means, I have paid more than I am supposed to, because the income statement reveals my true tax responsibilities. That’s why, the tax expense should be higher in future years, although the actual tax payment (tax payable settled) has already been performed. Am I getting this right?

[S2000magician]

@tingie71

Would someone be generous enough to help on the following questions? Many thanks!

• Is tax loss carryforward going to be an amount to deduct from “pretax income” or “taxable income”?

Taxable income.

@tingie71

• Based on my understand, if the accounting standards adopt a fast depreciation of assets, the carrying value is lower than the tax base. That means higher depreciation expenses have been released to income statemente, and resulting in lower net income, and thus, lower income tax expenses than tax payable, in previous years. That means, I have paid more than I am supposed to, because the income statement reveals my true tax responsibilities.

No, the tax return reveals your true tax responsibilities.

It simply means that you paid higher taxes than you would have had you used the higher depreciation that you show on your income statement.

@tingie71

That’s why, the tax expense should be higher in future years, although the actual tax payment (tax payable settled) has already been performed. Am I getting this right?

The difference is the reason that tax expense should higher tax expense in the future.

[tingie71]

Thanks so much!

[S2000magician]

You’re welcome.

[edupristine]

@tingie71

Would someone be generous enough to help on the following questions? Many thanks!

• Is tax loss carryforward going to be an amount to deduct from “pretax income” or “taxable income”?

• Based on my understand, if the accounting standards adopt a fast depreciation of assets, the carrying value is lower than the tax base. That means higher depreciation expenses have been released to income statemente, and resulting in lower net income, and thus, lower income tax expenses than tax payable, in previous years. That means, I have paid more than I am supposed to, because the income statement reveals my true tax responsibilities. That’s why, the tax expense should be higher in future years, although the actual tax payment (tax payable settled) has already been performed. Am I getting this right?

It is Taxable income, and you can carry forward net losses to the upcoming years for the tax purposes.