OT(ish): what exactly is a "pre tax loss"
Feb 5, 2010 | 1:06 am
#1
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OT(ish): what exactly is a "pre tax loss"
So BA has posted a "pre tax loss" of GBP 50 million, as discussed in the other thread.
I understand that you make a loss when your costs exceed your revenue. I assume that pre-tax profits means the difference between your revenue and costs when revenue > costs before you are taxed on the profits? So where does the 'pre-tax' come in when you make a loss. Surely you are not taxed on your losses?
I understand that you make a loss when your costs exceed your revenue. I assume that pre-tax profits means the difference between your revenue and costs when revenue > costs before you are taxed on the profits? So where does the 'pre-tax' come in when you make a loss. Surely you are not taxed on your losses?
Feb 5, 2010 | 1:18 am
#2
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Taxes are not based on accounting income, but taxable income, which could differ significantly based on numerous issues-investments, loss carry forwards, etc. With much of the income statement being influenced by changes in market values of items (derivatives, investment assets, etc), accounting income isn't necessarily a good indicator of performance. That's where cash flow statements come in (Cash is King).
Taxes are not based on accounting income, but taxable income, which could differ significantly based on numerous issues-investments, loss carry forwards, etc. With much of the income statement being influenced by changes in market values of items (derivatives, investment assets, etc), accounting income isn't necessarily a good indicator of performance. That's where cash flow statements come in (Cash is King).
Feb 5, 2010 | 3:29 am
#3
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That, and losses can have tax benefits. In rare cases a pre-tax loss can still result in a profit after tax benefits (at least in NL, but we are a corporate tax haven of course...)
Feb 5, 2010 | 3:57 am
#4
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Tax losses can be carried forwards to future years and reduce the tax payable. This means you can effective record a negative tax charge (ie a tax rebate) to reduce the overall deduction you make to your reserves for the loss.
Tax losses can be carried forwards to future years and reduce the tax payable. This means you can effective record a negative tax charge (ie a tax rebate) to reduce the overall deduction you make to your reserves for the loss.
