What is the future income tax?
Future income tax is part of the tax debt, which is postponed or delayed to some point in the future. This type of postponement may occur as a result of the differences between the business calculating taxes on its income, and by the methods used by the tax agency for calculating the amount of taxes payable for the period. The difference between the use of these different methods results in tax, which may not be paid in the current period, but are evaluated and considered due in the future period.
One of the factors that can lead to a kind of future income tax agreement is when deductions that count on net income in a given tax year are significantly lower than deductions calculated from tax income for the same period. This situation can win if the company experiences some net loss within one year and has to expand this loss for more than one tax period. This means that Company can pay taxes on the basis of taxable income and require only part of losingThose in one year, then claim the rest of the loss of the following year, when net profits. This allows you to compensate for some of these net profits for the next year, thus reducing the amount of taxes that are due.
Future income tax can also be a positive place negative. This situation may occur when taxable income is lower than net income, which creates a difference in calculations used by companies and the income agency for calculating tax payable. As a result, there is a chance that the Company may owe other taxes of the same income, and this debt is postponed until the following tax period. In the case of the difference, the difference is identified as a future income tax must be monitored and taken into account in the company's financial records, which helps to ensure that the taxes are paid within the revenue agency.
The presence of future income tax does not necessarily meanthat the methods of accounting or tax calculation were somehow mistaken. Depending on what is happening in terms of taxable income versus, the situation may actually be in fact for the benefit of business. This is especially true if losses for one year can be transferred to compensate for profits in the following year, which effectively helps reduce the amount of taxes that the company has to pay from the generated income.