Internal Audits Fix Financial Accounting Problems –
Compiling the Tax Pack –
THE TAX MANAGER will usually receive the basic components of the tax pack from the various financial managers in the various divisions of the business. The purpose behind this step is for each financial manager to review the financial accounting treatment of various accruals for accounting purposes and deductions for accounting purposes, so as to determine what accrual and deduction adjustments must be made for tax purposes in compiling the tax return for that year of assessment. Simple enough?
A tax manager of a major international consumer product multinational decided to review a few of the most recent tax packs. He found some interesting and consistent mistakes made by most of the financial managers preparing the tax pack information. Expenses they wanted to disallow for tax purposes were all for marketing purposes and were clearly deductible, but they had been marked not deductible, because certain employees who enjoyed these benefits had not been subjected to perks tax. The two concepts are completely different, and there was no reason to not deduct the expenses albeit the need to look at the perks received by the employees.
In accordance with Circular 230 Disclosure
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