The computation of income subject to tax is a two-step process. First, the net income as per the corporation’s Financial Statements is restated in taxation terms. Then the net income for tax purposes is reduced for items such as charitable donations, taxable dividends received, losses carried forward, etc. The result is the corporation’s taxable income on which the income tax is calculated.
The corporate accounting records should be prepared in such a way to ensure a quick and efficient identification of various taxation items. Some of the items to consider:
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