[Verse 1] Starting with the net income on the books we see Accounting profit calculated carefully But tax rules differ from what GAAP demands So adjustments come from Revenue's hands Add back expenses that tax law denies Subtract the income that's tax-free in their eyes Permanent differences change the base Temporary timing puts items in place [Chorus] From net to taxable, follow the flow Add back what's denied, subtract what won't show Net income plus and minus equals the key Taxable income is what we need to see Then multiply rates to find what we owe Tax payable is the final blow [Verse 2] Depreciation methods create a divide Book straight-line versus tax rates applied Warranty reserves we book but can't deduct Until actually paid, timing's been struck Meals and entertainment, only fifty percent Fines and penalties, tax deduction's bent Golf club dues and life insurance too Add these back, it's what we must do [Chorus] From net to taxable, follow the flow Add back what's denied, subtract what won't show Net income plus and minus equals the key Taxable income is what we need to see Then multiply rates to find what we owe Tax payable is the final blow [Bridge] Municipal bond interest comes off the top Capital gains inclusion rates never stop Fifty percent in Canada's the way Half included in taxable pay Deferred tax assets when book exceeds tax Future benefits from timing attacks Deferred tax liabilities flow the reverse When tax deductions come later, not first [Verse 3] Federal rates and provincial combined Marginal brackets keep rates refined Small business rates for active income earned Integration principles must be learned Apply the percentage to taxable base Installments paid reduce the space Between owing and already sent Tax payable is what's really meant [Chorus] From net to taxable, follow the flow Add back what's denied, subtract what won't show Net income plus and minus equals the key Taxable income is what we need to see Then multiply rates to find what we owe Tax payable is the final blow [Outro] Three steps to master, three amounts to know Net income, taxable income, tax owed below The calculation process clear and true CPA knowledge coming through
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