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corporate income tax

TAXES

CO

MPL

IAN

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Exemption

Tax Credits

Tax Breaks

AUDIT

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Tax Shelter

Tax Rebate

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In an audit, a tax agency examines and evaluates the financial statements of a person or company.

Audit

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An audit may reveal mistakes or inconsistencies that result in tax penalties or legal action.

Audit

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Example“A   company   may   be   selected  for   an   audit   randomly   or   if   its  tax   return   appears   to   contain  mistakes.”

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Compliance

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Compliance

If a person or company follows tax laws correctly, then they are in compliance with those laws.

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Example“Our   company   spends   a   lot   of  

time   and   money   on   making  

sure   we   are   in   full   compliance  

with  federal  tax  laws.”

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Tax  Exemptions

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Exemptions

Government may give an

exemption from tax on

some income, meaning

that income is not taxed.

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Exemptions are often given to organizations, such as charities and schools.

Exemptions

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Example“ In   many   t ax   s y s t ems ,  

property   that   is   inherited   or  

received   as   a   gift   is   given   a  

tax  exemption.”

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Tax  Credits

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Tax  Credits

A tax credit reduces the amount of tax that a person or company must pay.

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Tax  CreditsThe government may

give credits to businesses

in certain industries, like

oil exploration, to

encourage investment.

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Example“The   s t a te   gove rnment  

grants   our   company   a   tax  

credit   for   employing   people  

formerly  on  welfare.”

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Tax  Break

A tax break, which includes credits and exemptions, reduces a person or company’s taxes.

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Tax  Break

Companies may be given tax breaks for specific expenses, investments, or activities, such as manufacturing or research.

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Example“Many   people   are   upset   that  

large   corporations   receive  

greater   tax   breaks   from   the  

government  than  individuals.”

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Tax  Shelter

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Tax  Shelter

Tax shelters, which may be legal or illegal, are methods that reduce a company’s taxes.

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Tax  Shelter

Tax shelters include

offshore companies,

retirement plans, &

investment incentives.

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Example“With   very   low   tax   rates,  Bermuda   and   the   Caymans    are   popular   tax   shelters   for  U.S.  companies.”

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Tax  Rebate

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Tax  Rebate

When the government

gives a tax rebate, it

returns tax money to

people or companies.

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Example

“We  have   already   paid  more   tax  

than  we  actually  owe,  so  this  year  

we’re  getting  a  big  tax  rebate.”

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Now, it’s your turn

to practice!

Practice

For  example,  if  you  hear…

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Our  accountant  helps  make  sure  

we  are  in                  <beep>        .      .        .          .          …        ..      .        .        .                with  tax  laws.  

Example

ExampleYou  can  say  ...

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Our  accountant  helps  make  sure  we  

are  in  compliance  with  tax  laws.

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get ready to speak

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Question  1

If  you  have  ever  been  selected  for  

a  tax                        .  ..      .        .  <beep>        .      .      .              ,  you  know  it  is  stressful.

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Answer  1

If  you  have  ever  been  selected  for  a  

tax  audit  you  know  it  is  stressful.

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Question  2

The  government  is  offering  a  tax        .      .        .          .          …        ..      .        .        .                

<beep>        .      .        .          .          …        ..      .        .        .                for  new  mining  operations.

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Answer  2

The  government  is  offering  a  tax  

break  for  new  mining  operations.

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Question  3

Thanks  to  the  recent  tax  cuts,  I  should  get  a  big  tax      .      .        .          .          …    <beep>        .      .        .          .          …        ..      .        .        .              at  the  end  of  the  year.

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Answer  3

Thanks  to  the  recent  tax  cuts,  I  should  get  a  big  tax  rebate  at  the  end  of  the  year.

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