INTM256200 - Reliefs against Controlled Foreign Companies' tax: Examples
Example 1
A company has surplus shadow ACT of 拢5,000 and unrelieved surplus ACT of 拢50,000 which it wishes to set off against its Chapter IV liability. An apportionment is due in respect of chargeable profits of 拢100,000 and creditable tax of 拢3,000. There are no relevant allowances to set against the chargeable profits. CT is chargeable at 30% for the year.
The relevant maximum (C - D) is 拢17,000. This is arrived at as follows:
| - | 拢 |
|---|---|
| Shadow ACT on relevant distribution (C) 拢100,000 x 20% | 20,000 |
| Less: Creditable tax (D) | 3,000 |
| - | 17,000 |
Surplus shadow ACT of 拢5,000 is then set against this to give a 바카라 사이트榬elevant amount바카라 사이트� of 拢12,000.
| - | 拢 |
|---|---|
| Chargeable profits | 100,000 |
| Tax @ 30% | 30,000 |
| Less: Creditable tax | 3,000 |
| - | 27,000 |
| Less: Unrelieved surplus ACT (limited to relevant amount) | 12,000 |
| Net tax payable | 15,000 |
The company now has unrelieved surplus ACT of 拢38,000 (拢50,000 - 拢12,000) to carry forward.
Example 2
The facts are as in example 1 except that the company has trading losses of 拢10,000 in respect of which it makes a claim under ICTA88/SCH26/PARA1.
The relevant maximum is now 拢15,000 calculated as follows:
The chargeable profits after set off of relevant allowances (formula E - F) are 拢90,000.
| - | 拢 |
|---|---|
| Shadow ACT on a relevant distribution (C) : 拢90,000 x 20% | 18,000 |
| Less: Creditable tax (D) | 3,000 |
| - | 15,000 |
Surplus shadow ACT of 拢5,000 is then deducted from this to give a 바카라 사이트榬elevant amount바카라 사이트� of 拢10,000.
| - | 拢 |
|---|---|
| Chargeable profits | 100,000 |
| Tax on chargeable profits @ 30% | 30,000 |
| Relief for relevant allowances in terms of tax 拢10,000 @ 30% | 3,000 |
| - | 27,000 |
| Less: Creditable tax | 3,000 |
| - | 24,000 |
| Less: Unrelieved surplus ACT (limited to relevant amount) | 10,000 |
| Net tax payable | 14,000 |
The company now has unrelieved surplus ACT of 拢40,000 (50,000 - 拢10,000) to carry forward.
Example 3
The facts are as in example 2, except that X makes no claim under paragraph 1 of ICTA88/SCH26 in respect of a trading loss of 拢10,000 which is not used elsewhere. The relevant amount remains at 拢10,000 because the relevant maximum is calculated as if the maximum reliefs under paragraph 1 of ICTA88/SCH26 were set against the chargeable profits.
| - | 拢 |
|---|---|
| Tax on chargeable profits @ 30% | 30,000 |
| Less: Creditable tax | 3,000 |
| - | 27,000 |
| Less: Unrelieved surplus ACT | 10,000 |
| Net tax payable | 17,000 |
The company still has unrelieved surplus ACT of 拢40,000 (拢50,000 - 拢10,000) to carry forward.