- 1 Marks
Question
For an existing business, the basis of assessment is:
A. Continuity basis
B. Accrual basis
C. Preceding year basis
D. Actual basis
E. Succeeding year basis
Answer
Answer: C Preceding year basis
Explanation: The correct answer is C. For an existing business, the basis of assessment is the preceding year basis. This means the tax liability for the current year is assessed based on the income earned in the preceding financial year.
- Reasoning: The preceding year basis allows tax authorities to calculate taxes based on finalized accounts from the previous year, providing a clear and accurate reflection of the business’s taxable income.
- Tags: Basis of Assessment, Existing Business, Preceding Year, Taxation
- Level: Level 1
- Topic: Tax Administration and Enforcement
- Series: MAY 2021
- Uploader: Kwame Aikins