What is a post-cessation receipt?
Post-cessation receipts are usually something that would have been taken into account in arriving at the profits of the trade had it not ceased. are received after a person permanently ceases to carry on a trade. arise from the carrying on of the trade before the cessation, and.
What are post-cessation expenses?
Post-cessation expenses are expenses incurred wholly and exclusively by the trader in connection with a trade, profession or vocation which has ceased. For more on the meaning of wholly and exclusively, see the Wholly and exclusively guidance note.
How do I claim post-cessation expenses?
To make a successful claim for an allowable post-cessation expense:
- the trade must have ceased, and.
- the expense would have been deductible in calculating the trading profits ie they still meet the wholly and exclusively test and be revenue in nature in order to qualify for relief.
What is post-cessation trade relief?
A person who incurs certain costs or bad debts directly related to a trade, profession or vocation that has ceased may claim relief against their other income and capital gains. This is known as “post-cessation trade relief”.
What is post-cessation?
Post-cessation receipts, as found at CTA2009 s190, are receipts that would have been accounted for when calculating the profits of the trade had it continued. They will have been received after the trade permanently ceased and will have arisen due to the previous carrying on of the trade.
What does post-cessation mean?
The concept of ‘post-cessation receipt’ is initially defined as a sum which is received after a person permanently ceases to carry on a trade but which arises from the carrying on of the trade before the cessation (ITTOIA 2005, s. 246).
Can post-cessation expenses be carried back?
Post-cessation receipts incurred in the first six years after cessation can be carried back and treated as if they arose on cessation. There may be occasions where the person receiving the post-cessation receipt would rather that it was treated as arising at the date of the cessation of the trade.
What is cessation tax?
The profits to be charged to income tax for the year of assessment in which a trade or profession is permanently discontinued are the actual profits of the period from 1 January in that year of assessment to the date of cessation. Any unutilised losses carried forward are to be set off or deducted from such profits.
What is cessation rule?
“Where a company permanently ceases to carry on a trade or business (or in the case of a company other than a Nigerian company, permanently ceases to carry on a trade or business in Nigeria) in an accounting period, its assessable profits therefrom shall be the amount of the profits from the beginning of the accounting …
What are cessation accounts?
Cessation accounts are the final set of accounts your company will prepare. They cover the trading activity to your date of cessation from the date your company started trading or when the last set of statutory accounts were prepared. Your cessation date is the date of the last invoice raised or expense incurred.
What does cessation mean in business?
Cessation of Business means Employer’s ceasing to operate in the ordinary course of business, whether by dissolution, liquidation, sale of assets, consolidation, merger or otherwise, in connection with, pursuant to or arising out of a good faith determination by the Board that the continuing operation of the business …
What is cessation director?
Resignation of a Director in a Company. A Director in a company may want to resign or the Board of Directors may want to remove the Director for several reasons. The Director of a company can also resign from the Board by filing a resignation letter with the company and also intimating the ROC with the same.
What are post-cessation receipts?
Post-cessation receipts are taxable income of the person when they receive them, similarly relief may be available for post-cessation expenses. To make a successful claim for an allowable post-cessation expense:
What happens to post-cessation expenses after cessation?
Once the net income is utilised to claim the post-cessation expenses, the excess can be set against capital gains of the same year. Anything remained unclaimed can be carried forward to use against future post-cessation receipts. The relief is also restricted by the amount of any debts owed by the trader that were unpaid at the date of cessation.
When is a cash basis election a post-cessation receipt?
If, immediately before a person permanently ceases to carry on a trade, a cash basis election has effect in relation to the trade, a sum is to be treated as a post-cessation receipt only if it would have been brought into account in calculating the profits of the trade on the cash basis had it been received at that time (see BIM70015 onwards).
What happens to unclaimed receipts after cessation of trading?
Anything remained unclaimed can be carried forward to use against future post-cessation receipts. The relief is also restricted by the amount of any debts owed by the trader that were unpaid at the date of cessation. If an unpaid debt restricted the amount of relief in an earlier tax year, it is not allowed in a later year either.