If both company and tax are on accrual basis, there shouldn't be any different because if the prepayment is still sitting on the balance sheet, it wouldn't affect the taxable income
Thank you, that is true. But in In South Africa the tax rules are a bit more complicated than that and Section 23H of the Income Tax Act may result in a temporary difference.
sorry I got a question like if follow the rule: check whether the asset has the future taxable amount and then decide the tax base equals to the future deductible amount or carrying value. However, as the prepaid expense, there is no future taxable amount, right? Can anyone help me? :（
Hi Mengran. The tax base of an asset is the amount that will be deductible against taxable economic benefits from recovering the carrying amount of the asset. Where recovery of an asset will have no tax consequences, the tax base is equal to the carrying amount. The recovery of a prepaid expense has tax consequences however because it will be added back on the tax computation in the future period to which it relates. Therefore the tax base of a prepaid expense is the amount that would be deductible in future which is zero. Hope this helps. Good luck with your studies. Kind regards, The Tabaldi Team.
principles well explained
Thank you for your comment Paul Nxumalo - Great that you found these videos beneficial - Best wishes for all your future studies.
The Tabaldi Team
👌🏼short ‘n sweet. Understandable.
You guys are great!!!! i would like to know what is the copyright issues if we use part of the lectures here for our classes. Please advise.
If both company and tax are on accrual basis, there shouldn't be any different because if the prepayment is still sitting on the balance sheet, it wouldn't affect the taxable income
Thank you, that is true. But in In South Africa the tax rules are a bit more complicated than that and Section 23H of the Income Tax Act may result in a temporary difference.
awesome
Thank you for your comment Njabulo - We are pleased you benefited from our videos. The Tabaldi Team
sorry I got a question like if follow the rule: check whether the asset has the future taxable amount and then decide the tax base equals to the future deductible amount or carrying value. However, as the prepaid expense, there is no future taxable amount, right? Can anyone help me? :（
Hi Mengran. The tax base of an asset is the amount that will be deductible against taxable economic benefits from recovering the carrying amount of the asset. Where recovery of an asset will have no tax consequences, the tax base is equal to the carrying amount. The recovery of a prepaid expense has tax consequences however because it will be added back on the tax computation in the future period to which it relates. Therefore the tax base of a prepaid expense is the amount that would be deductible in future which is zero. Hope this helps. Good luck with your studies. Kind regards, The Tabaldi Team.
OMG I didn't expect of your reply! THX a lot!
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@@TabaldiEducation Hey, what do you mean by the recovery of a prepaid expense? THANKS
@@Adam-pc9un Hi Adam. Please reply with the time stamp then I will have a look for you.
👌🏼short ‘n sweet. Understandable.