2.1

the basis period for an individual or a person other than a company or a co-operative commencing a new business;

3.1

Income tax is chargeable for a year of assessment.

• • 3.4.1

Accounts ending on 31 DecemberWhere a business is commenced and the accounts are prepared from the date of commencement to 31 December of the same year, that accounting period is the basis period for the first year of assessment.

Example:
An individual commences business on 11.05.2001 and the accounts close on 31.12.2001.

The accounting period 11.05.2001 to 31.12.2001 is the basis period for the year of assessment 2001.

3.5

Change of Accounting Date

• • 3.5.1

Normal accounts ending on 31 DecemberWhere accounts normally end on 31 December and there is a change of accounting date, the basis period in the year of change is year ending 31 December.

Example:
An individual normally prepares his accounts ending 31 December. He changes his accounting date to 30 September and prepares accounts as follows: 01.01.2001 to 30.09.2001, and subsequently to 30 September each year.

The basis period for the year of assessment 2001 is 01.01.2001 to 31.12.2001.The basis period for the year of assessment 2002 is 01.10.2001 to 30.09.2002 .

• • • • A.

New accounts ending in the following yearThe new accounting period is the basis period for the year of assessment in the failure year.

Example:
An individual’s accounts are normally prepared ending on 30 September. He changes his accounting date and the accounts now close on 31 March. The accounts are prepared as follows: 01.10.1999 to 30.09.2000, 1.10.2000 to 31.03.2001 (period of 6 months), and to 31 March for subsequent years.

The basis period for the year of assessment 2001 is 01.10.2000 to 31.03.2001 (6 months).The basis period for the year of assessment 2002 is 01.04.2001 to 31.03.2002.

• • • • [The rationale for determining the basis periods for the above 2 situations is that no accounting period or year of assessment is lost and there is no overlapping of basis periods.]

• • 3.5.3

Normal accounts not ending on 31 December and new accounts prepared for more than 12 months:

• • • • A.

New accounts ending in the following yearThe new accounting period is the basis period for the year of assessment in the failure year.

Example:
An individual’s accounts are normally prepared ending on 31 July. He changes his accounting date and the accounts now close on 31 October. Accounts are prepared from 01.08.2000 to 31.10.2001 (15 months) and to 31 October for subsequent years.

The basis period for the year of assessment 2001 is 01.08.2000 to 31.10.2001 (15 months).The basis period for the year of assessment 2002 is 01.11.2001 to 31.10.2002.

• • • • [The rationale for determining the basis periods for the above 2 situations is that no accounting period or year of assessment is lost and there is no overlapping of basis periods. Any fraction of a month is treated as falling into the first period.]

3.6

An Individual Joining a Partnership

• • 3.6.1

If an individual joins a new partnership, the basis period for the individual in respect of the partnership source of income is as determined under subparagraph 3.4.1, 3.4.2 or 3.4.3.Example:
An individual joins a new partnership which commences business on 18.02.2001. The first accounts are prepared to 30.09.2001 and subsequently to 30 September each year.

The basis periods for the individual’s source from the partnership are:Year of assessment 2001 18.02.2001 to 31.12.2001

Year of assessment 2002 01.10.2001 to 30.09.2002

4.1

Where there is an overlapping period for two basis periods, the adjusted income or adjusted loss common to both basis periods shall be ignored in the second basis period.