In 2014 an Australian firm,RJH Inc. ,has local earnings before taxes of $100,000 and its ordinary shareholders have a 37% marginal tax rate.The company's tax expense was
A)$30,000
B)$37,000
C)$67,000
D)$7,000

Question

Quizplus · Accepted Answer

The tax expense is calculated by multiplying the earnings before taxes by the marginal tax rate: $100,000 * 0.37 = $37,000. However, the question asks for the company's tax expense, which is typically calculated using the corporate tax rate, not the shareholders' marginal tax rate. Assuming a corporate tax rate of 30% (a common rate in Australia), the tax expense would be $100,000 * 0.30 = $30,000.

In 2014 an Australian Firm,RJH Inc