Taxation

Taxation

Taxation

Recognising the Basis of Assessment

/
In taxation, the basis of assessment refers to the rules and timing by which income or profits are allocated to specific tax years. Recognising the correct basis of assessment is essential to determine when income becomes taxable and under which period it falls. This ensures accurate tax reporting, compliance with legislation, and minimisation of disputes between taxpayers and tax authorities. 1. Importance of the Basis of Assessment Accurate Tax Liability: Ensures income is taxed in the correct period, avoiding overpayment or underpayment of tax.… Read more
Taxation

Reassessing the Laffer Curve: Theoretical Foundations, Empirical Evidence, and Fiscal Policy Implications

/
The Laffer Curve has long been a central concept in public finance and taxation theory, proposing a non-linear relationship between tax rates and government revenue. Popularized by economist Arthur Laffer in the 1970s, it asserts that there exists an optimal tax rate that maximizes revenue, beyond which higher rates lead to declining collections due to disincentives to earn, invest, or comply. Despite its intuitive appeal, the Laffer Curve remains a topic of considerable debate, especially in the context of real-world fiscal policy.… Read more
Economics, Taxation

The Gig Economy and Taxation: Challenges in Compliance, Policy, and Equity

/
The rise of the gig economy—characterized by short-term, flexible, and platform-mediated work—has transformed labor markets worldwide. From ride-sharing to freelance platforms, millions of workers now operate outside traditional employment structures. While this model offers flexibility and income opportunities, it presents significant challenges for tax authorities, including compliance enforcement, revenue collection, and policy design. This article explores the implications of the gig economy for tax systems, drawing on empirical data, regulatory responses, and policy innovations across jurisdictions.… Read more
Economics, Taxation

Tax Incentives and Economic Development: A Critical Review of Effectiveness and Efficiency

/
Governments worldwide use tax incentives—such as tax holidays, investment credits, and special economic zones (SEZs)—to attract investment, foster innovation, and stimulate economic development. While such incentives are popular tools in fiscal policy, their effectiveness remains widely debated among economists and policymakers. This article critically examines the theoretical rationale, empirical evidence, and case studies on tax incentives, focusing on their economic impact, fiscal cost, and administrative challenges. Theoretical Foundations of Tax Incentives From a neoclassical perspective, investment decisions are driven by after-tax returns.… Read more
Economics, Taxation

Green Taxation and Environmental Economics: Evaluating Carbon Pricing Mechanisms in Global Policy

/
In the context of escalating climate crises and international sustainability goals, green taxation has emerged as a pivotal tool in aligning economic incentives with environmental outcomes. Central to this development is carbon pricing—through carbon taxes or cap-and-trade systems—as a policy mechanism to internalize the negative externalities of greenhouse gas (GHG) emissions. This article critically examines the theoretical foundations, empirical effectiveness, and global variations in carbon pricing systems while highlighting recent case studies and policy outcomes.… Read more
Taxation

Common Errors in Determining Assessable Trading Income

/
Accurately calculating assessable trading income is crucial for correct tax reporting and compliance. However, businesses often make errors that can lead to overstatement or understatement of taxable income. These mistakes can result in penalties, interest charges, or missed tax-saving opportunities. Understanding these common errors helps in avoiding them and ensuring accurate tax filings. 1. Failure to Add Back Disallowable Expenses Some expenses are not permitted for tax purposes even though they appear in the income statement.… Read more
Taxation

Timing and Basis of Assessment

/
The timing and basis of assessment determine when and how a business’s trading income is recognized for tax purposes. These principles ensure that income is taxed in the correct accounting period and under the appropriate method. Understanding them is essential for accurate tax reporting, compliance, and planning. 1. Basis of Assessment The basis of assessment refers to the accounting method used to calculate and report assessable trading income. There are two main bases used depending on the size and structure of the business.… Read more
Taxation

Formula for Assessable Trading Income

/
The formula for assessable trading income is used to calculate the taxable profit derived from business activities. It begins with the accounting profit (or net profit per financial statements) and adjusts for tax-specific items, such as disallowable expenses, capital allowances, and income not reflected in the accounts. This ensures that only the correct taxable income is reported to the tax authorities. 1. General Formula Assessable Trading Income = Accounting Profit
+ Disallowable Expenses
− Capital Allowances
+ Taxable Income Not in Accounts
− Non-Trading Income Included in Accounts 2.… Read more
Taxation

Components of Trading Income

/
Trading income refers to the income earned by a business from its core operating activities. It includes various forms of income generated through the sale of goods, provision of services, and other business-related operations. Understanding the components of trading income is essential for accurate financial reporting, tax compliance, and business analysis. 1. Sales Revenue This is the primary and most significant component of trading income, representing the total income generated from the sale of goods or services during a given period.… Read more
Taxation

Assessable Trading Income

/
Assessable trading income refers to the portion of a business’s trading profits that is subject to taxation. It is a critical concept in tax accounting, as it determines how much income a business must report and pay taxes on. The calculation of assessable trading income involves identifying total trading income and making appropriate adjustments for tax purposes, such as disallowable expenses and capital allowances. 1. Understanding Assessable Trading Income Trading income is generally derived from the activities of buying and selling goods or services.… Read more
Scroll to Top