stock.enigma wrote:Turnover-cost of sales-admin expenses=EBITDA
EBITDA-depreciation-interest expense=PBT
PBT-tax=PAT
No need to pay an accountant for that
@stock.enigma not that simple.
Taxable profit=Accounting PBT+Depreciation-Capital Allowances.(add and deduct other taxable/ non-taxable incomes and expenses)
Capital allowances include: Wear&Tear (on machinery), Investment deduction (on factories and manufacturing equipment), etc
Rates of Capital Allowances may be higher or lower than depreciation hence deferred tax.
Company may be depreciating assets like plant and lease hold property while there are tax no capital allowances applicable, hence permanent differences, in the accounting profit base and the taxable profit base!
Therefore depreciation per se does not mean less taxes.
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