CAP1 Tax: A breakdown of the basics

With four examinable tax heads on the Tax Syllabus, getting them correct on exam day can be challenging. Philip Nicolls lets you in on the secret to getting them right

The CAP1 Tax syllabus spans income tax (IT), corporation tax (CT), capital gains tax (CGT) and value-added tax (VAT). Getting to grips with all four tax heads is quite a challenge.
 
A quick read through recent examiner reports highlights that while many candidates differentiate the separate taxes, some confuse the rules for each tax under exam pressure. 

Often this includes some of the more fundamental aspects, and candidates lose relatively easy marks. These basic aspects include:

• The rate of tax applicable;
• The due dates for filing and payment; and
• The rules relating to add-back deductions for IT vs CT – candidates often apply the IT rules in their CT computation.

It was tempting to simply include three reference tables in this article showing the information for these three aspects across the relevant tax heads. However, the CAP1 exams are closed book, and getting the information from a table is the least effective way to understand and memorise it.

Instead, I challenge you to take an hour to prepare the three tables yourself using your lecture slides and textbook. You should:

1. Detail each of the three aspects, including a list of all the common add-backs and deductions;
2. Add a column for each relevant tax head; and
3. Populate your table with the correct rate/date/treatment.

Repeat this technique before your mock exam and spend a few seconds reviewing it every time you study tax. When you sit your mock exam, answer these questions from memory. 

I guarantee that researching and preparing the information yourself will make it much more memorable.

Good luck with your CAP1 Tax paper in May. Please don’t miss out on any of those easy marks!

Philip Nicolls is Paper Development & Syllabus Manager at Chartered Accountants Ireland