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Schedule D cases 1 and 2- Commencement 2nd Year

  • 09-12-2007 1:46am
    #1
    Registered Users Posts: 38 ✭✭✭ rathmaniacal


    In my book , it says that if there is an accounting period that is not 12 months long ending in the second tax year; if that is the only accounting period ending in that tax year; and if trading commenced 12 months or more before the date on which the period ends, the taxable profits for the year ending on that date are assessable in tax year 2.
    For example, I start trading on the 1st of May 2006. I prepare accounts for the 17 months ending 30th September 2007. My taxable profit for that time is 68000. In year one, i am assessed on the may to december 06 portion of the 68000.
    In year 2 ...well, the book says I am assessed from the period 1/6/2006 to the 31/05/2007...or 12/17ths of the the 68000. I can see why it would be 12/17ths, but i dont see why the book would assess up to 31/05 in the example. It said earlier that the taxable profits for the year "ending on that date" (which I take to mean 30/12) are to be assessed. Is this some kind of typo in the book, or is there something I have not picked up on?


Comments

  • Closed Accounts Posts: 459 ✭✭ Bren1609


    I think its to do with basis of assessment

    1st year is always on an actual basis.

    2nd year based on accounting year and continues like that until cessation when it goes back to actual basis.


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