SA2 A2010 Q2 (ii) - Tax Calculation

[calibre2001]

In the examiner’s comment it was mentioned that:

This question was answered well by candidates who were well prepared, with a number of candidates gaining full marks. However, a common mistake was to tax the GRB at 20% rather than 28%. Also, candidates tended to ignore the GRB when comparing “I-E” with NC1.

My question is whether candidates lose marks for not grossing up the LATP (previously NCI) with the OLTB (previously GRB) profits in their workings yet get the correct final taxable figures?

Thanks all.

 

[Mike Lewry]

The rules have changed recently, so that OLTB profits don't need to be added to the BLAGAB I-E result before comparing with the LATP, so the issue will no longer arise.

Previously though, the LATP covered both BLAGAB and GRB and so GRB profits would have been added to the I-E result before comparison. If this hadn't been done, then yes, marks would have been lost (assuming the question asked for an explanation of your calculation) even though if wouldn't have affected the final answer.