Tax reconciliation and Interest rate risk: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
m (Spacing.)
 
(Add link.)
 
Line 1: Line 1:
''Accounting''.  
(IRR).


A quantified explanation of the difference between:
The risk associated with a change in interest rates.


# The reported tax charge (or credit) in financial statements; and
# The standard rate of corporation tax applied to the reported accounting profit (or loss).


This may take several forms in the treasury context.


In this context item 2. above is sometimes known as the 'expected tax charge'.
For example, and depending on the direction of the change:
*Increasing interest cost
*Falling interest income
*Changing market value of debt, or of pension liabilities
*Differences in competitiveness
*The changing nature of a market when interest rates change
*Secondary effects, especially potentially adverse effects, resulting from any of the primary effects above. For example, potential breaches of interest cover covenants.
 
 
Sometimes written 'interest-rate risk'.
 
Not to be confused with Internal Rate of Return, which is also abbreviated to ''IRR''.




== See also ==
== See also ==
* [[Effective tax rate]]
* [[Asset-liability management]]
* [[Reconciliation]]
* [[Cross-currency interest rate swap]]
* [[Tax computation]]
* [[Double-whammy]]
* [[Duration]]
* [[Exposure]]
* [[Fair value interest rate risk]]
* [[Financial covenant]]
* [[Forward rate agreement]]
* [[Guide to risk management]]
* [[Internal rate of return]]
* [[Interest cover]]
* [[Interest rate]]
* [[Interest rate cap]]
* [[Interest rate collar]]
* [[Interest rate exposure]]
* [[Interest rate floor]]
* [[Interest rate futures]]
* [[Interest rate gap]]
* [[Interest rate guarantee]]
* [[Interest rate option]]
* [[Interest Rate Risk in the Banking Book]] (IRRBB)
* [[Interest rate shock]]
* [[Interest rate swap]]
* [[IRHP]]
* [[Matching]]
* [[Pipeline risk]]
* [[Portfolio hedging]]
* [[Risk-free rate of return]]
* [[Risk-free rates]]
* [[Shock]]
* [[Time bins]]
* [[Treasury]]
 
 
== Other resource ==
 
[[Media:2015_05_May_-_The_devil_is_in_the_detail.pdf| The devil is in the detail, The Treasurer, 2015]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Manage_risks]]

Latest revision as of 06:49, 19 March 2024

(IRR).

The risk associated with a change in interest rates.


This may take several forms in the treasury context.

For example, and depending on the direction of the change:

  • Increasing interest cost
  • Falling interest income
  • Changing market value of debt, or of pension liabilities
  • Differences in competitiveness
  • The changing nature of a market when interest rates change
  • Secondary effects, especially potentially adverse effects, resulting from any of the primary effects above. For example, potential breaches of interest cover covenants.


Sometimes written 'interest-rate risk'.

Not to be confused with Internal Rate of Return, which is also abbreviated to IRR.


See also


Other resource

The devil is in the detail, The Treasurer, 2015

Retrieved from ‘https://wiki.treasurers.org/w/index.php?title=Tax_reconciliation&oldid=55196’