Corporate tax refers to a direct tax levied by various jurisdictions on the profits made by companies or associations and often includes capital gains of a company. Earnings are generally considered gross revenue minus expenses. Corporate expenses that relate to capital expenditures are usually deducted in full (for example, trucks are fully deductible in the Canadian tax system, while a corporate sports car is only partly deductible)over their useful lives by using % rates based on the class of asset they belong to.Notably, accounting rules about deductible expenses and tax rules about deductible expenses will differ at times, giving rise to book-tax differences. If the book-tax difference is carried over more than a year, it is referred to as a temporary difference, which then creates deferred tax or future assets and liabilities for the corporation, which are carried on the balance sheet.
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