Accounting Q&A · Taxation · Topic 3
Try each of the 25 questions before revealing its answer. The rates and amounts in the exercises are hypothetical. For an actual return, check the rules for the jurisdiction and tax year.
Worked example
Use hypothetical bands of 0% on the first 10,000, 10% on the next 10,000 and 20% above 20,000. Taxable income of 24,000 produces 1,800 tax before credits. A usable credit of 200 and prepayments of 1,100 leave 500 due.
Key concepts
1. What should you identify before preparing an individual return?
Confirm jurisdiction, tax year, residence status and the filing obligation.
2. What is gross income in a practice computation?
The starting total of relevant income before deductions and exclusions under the stated rules.
3. What evidence supports employment income?
Pay statements and any official annual wage or withholding records.
4. What evidence supports self-employment income?
Sales invoices, receipts, bank records and reconciled business accounts.
5. Why separate personal and business spending?
Only costs eligible under the applicable rules can enter the business tax computation.
6. How do you handle a shared personal and business cost?
Document a supportable allocation and apply any local restrictions.
7. What is taxable income?
The amount remaining after applying the relevant inclusions, exclusions and deductions.
8. Can a deduction create a usable loss?
Loss recognition and relief depend on local rules and the type of income.
9. What is a tax band?
A range of taxable income to which a stated marginal rate applies.
10. Do you apply the highest marginal rate to all income under a banded exercise?
Apply each band’s rate only to the portion within it.
Practice and calculations
11. Income is 27,000 and allowed deductions total 3,000. What is taxable income?
24,000 under the stated assumptions.
12. The first 10,000 is taxed at 0% and the next 10,000 at 10%. How much tax applies to those bands?
1,000.
13. If 4,000 above those bands is taxed at 20%, what does it add?
800.
14. What is total tax before credits in that case?
1,800.
15. What if the taxpayer can use a 200 credit in full?
Liability after credit is 1,600.
16. If 1,100 has already been withheld and is creditable, what remains?
500.
17. What if creditable payments instead total 1,700?
There is a 100 overpayment in the exercise, subject to the local refund or offset rules.
18. How does a refundable credit differ from a non-refundable credit?
A refundable credit may result in a payment after reducing tax. A non-refundable credit generally cannot do so on its own.
19. Why check foreign income separately?
Residence, source rules, treaties and foreign tax relief may affect how it is treated.
Review and filing checks
20. Why verify carry-forward balances?
Prior-year losses or credits may expire or be limited by income type and period.
21. What should you reconcile before filing?
Agree reported income, withholding and payments to source documents.
22. How should missing records be handled?
Seek replacements and follow official rules for any permitted estimate or correction.
23. How do you correct a return after filing?
Use the authority’s applicable amendment or correction process and verify the time limits.
24. Which figures should the final computation show?
Show taxable income, tax before credits, credits used, prepayments and balance or overpayment.
25. Why keep a copy of the calculation?
It supports review, later amendments and responses to authority queries.
For Bangladesh income tax legislation and amendments, consult the National Board of Revenue.