CTA Part 1 cheat sheet

Taxable income = gross income − allowable deductions − exemptions/reliefs; apply marginal rates band by band.

Employment income is generally taxed on receipt; benefits-in-kind use cash equivalent, statutory formula, or market value.

Allowance phase-outs create effective marginal rates above the statutory rate because the allowance falls as income rises.

Pension contributions may be deducted or relieved at marginal rates, subject to annual and lifetime caps that vary by jurisdiction.

Social security contributions are separate from income tax and may have ceilings, floors, and different bases.

Residence usually determines worldwide taxation; domicile or remittance basis can limit tax on foreign income in some systems.

Recurring receipts are more likely income; disposal of capital assets is more likely capital, unless trading badges apply.

Corporate taxable profit = accounting profit + disallowed expenses − tax allowances/incentives ± timing adjustments.

Dividends paid are not deductible; interest may be deductible subject to thin capitalisation and earnings-stripping limits.

Related-party cross-border pricing must satisfy the arm's length principle, supported by contemporaneous documentation.

Losses may carry forward or back, but ownership changes and business-purpose tests can restrict use.

Group relief permits qualifying group companies to surrender losses or credits under ownership thresholds.

Participation exemptions may exempt dividends or gains from qualifying shareholdings subject to holding and tax tests.

Withholding taxes on dividends, interest, and royalties may be reduced by treaty or domestic exemptions.

Capital gain = disposal proceeds − allowable acquisition cost − incidental costs − qualifying enhancement expenditure.

Part disposal base cost = total base cost × A/(A+B), where A is consideration and B is market value retained.

Principal residence relief exempts qualifying occupation periods; absences and elections can extend relief.

Rollover relief defers gain on reinvestment in qualifying assets; the new base cost is reduced by the deferred gain.

Transfers between spouses or group companies are often no gain/no loss, preserving original base cost.

Wasting assets and depreciating assets may be exempt or restricted; moveable property rules vary.

Property rental receipts are income; sale proceeds are capital unless the taxpayer is dealing in property.

Net VAT/GST = output tax on taxable supplies − allowable input tax on business purchases.

Exempt supplies carry no output tax but also no input credit; zero-rated supplies carry input credit.

Registration is required above a turnover threshold; voluntary registration may recover input tax but adds compliance.

Place-of-supply rules decide taxing jurisdiction; goods and services and B2B/B2C treatments differ.

Reverse charge makes the recipient account for tax on imported services, often with an offsetting input credit.

A valid tax invoice and timely records are usually required to support input tax claims.

Stamp duty, transfer taxes, and customs duties are transaction taxes separate from VAT/GST.

Self-assessment requires filing and payment by statutory deadlines; late filing and late payment attract penalties and interest.

Penalties for inaccuracy may be mitigated by reasonable care; deliberate conduct attracts higher sanctions.

Tax evasion is illegal; tax avoidance may be counteracted by specific rules or a general anti-abuse rule.

Record retention periods commonly run several years from filing or assessment and must support all return entries.

Information powers allow the tax authority to request documents and answers, subject to legal privilege and safeguards.

Professional ethics require integrity, objectivity, confidentiality, and competence; client instructions do not override law.

Dispute routes typically involve assessment, objection or appeal, then tribunal or court review.

Residents are generally taxed on worldwide income; non-residents on source income, subject to treaty allocation.

Treaties allocate taxing rights and provide relief by exemption or credit, often limiting withholding rates.

Foreign tax credits are usually capped at domestic tax on the same income; excess may carry forward or back.

A permanent establishment gives the source state taxing rights over attributable business profits.

Transfer pricing applies the arm's length principle to cross-border related-party transactions.

CFC rules may attribute low-taxed foreign subsidiary income to resident shareholders or parents.

Exit taxes may deem unrealised gains realised when residence or corporate tax status changes.