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Tax Allocation Revisited

Article Abstract:

Controversy exists in Canada over tax allocation for corporations. In 1954, the Canadian Institute of Chartered Accountants (CICA) required disclosure of the effect of timing differences by providing for deferred income tax in financial statements. Then comprehensive tax allocation becomes a Generally Accepted Accounting Principles (GAAP), but provided large deferred tax balances that did not recognize the tax incentives of investment. The United States accounting bodies are researching the same issue. Accounting for income taxes needs to be reconsidered due to its complexity, confusion among users and preparers, impact on smaller companies, and it differs from that of the international community. Timing differences are economic events and need to be included on financial reports - a no allocation or partial allocation approach is not appropriate. Varied timing differences need different methods of reporting tax effects. The timing of the economic benefit or detriment needs to be considered. Tax rate changes and the time value of money are involved in measuring the effects of tax allocation. These too, need to be accounted for in the period they occur.

Canada, Taxation, Corporate taxes, Corporations, Resource allocation

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Entering uncharted waters

Article Abstract:

Changes have been occurring in the financial reporting of the public sector in Canada. Management's Discussion and Analysis of financial statement data is discussed with emphasis on its benefits and problem areas.

Finance

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The infrastructure web

Article Abstract:

The accounting methods required to produce financial states for public sector infrastructure should be based on measuring the demand for infrastructure in relation to the needs of the community.

Infrastructure (Economics)

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