T301

Tax Modeling

Overview

Tax Modeling (T301) is a 1-day course teaching the key elements of modeling tax. While it is recognized that tax rules are extremely jurisdiction and time-specific, there are certain modeling requirements that are sufficiently widespread, and these are effectively addressed in this general course. The course covers the modeling of subjects such as annualization of taxable income (and model design issues that stem from this problem), handling tax loss carryforwards (and expiration thereof), deferred tax calculations, different income schedules (e.g. trading / Schedule DI vs non-trading / Schedule DIII in the UK), etc. At the conclusion of the course attendees will have covered many of the commonly occurring elements of tax calculations.

Please note the course fees below exclude VAT, which will be added to all invoices.


Please contact courses@fi-mech.com for dates and locations

Target audience

Tax Modeling is a technical course, suited to those who need to set-up tax computations in financial models, or need to amend or review tax calculations in particular.

Those participants without a prior knowledge of business theory and basic model building skills will struggle to keep up with the pace of this course, and may find it more effective to take a ‘watch, not do’ approach to the course.

Teaching approach

Consistent with all Financial Mechanics T-series courses, Tax Modeling is a hands-on course with limited lecturing or speaking to PowerPoint slides. Attendees will follow along with the instructor, adding Excel calculations to their own financial model on their own computers; in this way they immediately practice what they have been taught and can confirm their understanding of the principles of tax modeling.

The course applies FAST modeling in its approach, namely producing models that are flexible, accurate, structured, and transparent, i.e. avoiding complex formulas so they are simple to follow even if the subject matter is complicated.

Agenda

The one-day agenda will include sessions focused on:

• Annualization of the tax computation (including reference note
commenting on a semi-annual declining / reducing balance rate
approximation method)

• Tax payment working capital timing issues, e.g. quarterly estimated
tax payment modeling. Distinction between deferred tax and tax
payable accounts.

• Tax loss carryforwards, and expiration thereof

• Enhanced deferred tax calculations, tax rate applied to difference
between tax and accounting written-down values, and consideration
of complicating factors, e.g. tax holidays, different bases causing
‘permanent differences’

• Multi-schedule tax computation, e.g. general trading vs. non-trading,
UK-specific (Schedule A, Schedule DI, and Schedule DIII). Includes
note describing which losses can be applied to which income (and
modeling recommendation as to how to ‘cascade’ these in priority of
application.

• Tax issues on tax deductibility of related-party subordinated debt
instruments (e.g. Spens Clause issues)

• Valuation issues associated with trapped or inefficiently-used tax
losses.

• Review of common non-income taxes, e.g. VAT, stamp duty, dividend
withholding taxes, revenue taxes, municipal/state level income taxes
(then deductible from federal)

Instructor

John Richter is the instructor for this course. John was formerly a principal instructor for F1F9, a specialist financial modeling company that now licenses its training courses exclusively to Financial Mechanics. He has over 20 years experience in cash flow modeling in many tax jurisdictions (including the US and UK). He has been teaching advanced courses in financial modeling, as well as running his own modeling services company, for the past 8 years.

In partnership with his former colleague at F1F9, John developed the principles of FAST modeling; an approach to financial modeling adhered to by leading financial institutions and other organizations around the world. He has a BSc in Mechanical and Aerospace Engineering (1985) from Princeton University and an MBA (1992) from Harvard Business School.

Requirements

It is best if attendees are intimately familiar with the principles and specific techniques of FAST modeling, which is applied throughout the Tax Modeling course. Preferably this knowledge should be obtained from reasonably recent attendance of the FAST Modeling Skills (T101) course followed by some practical on the job application.

Attendees will also need to bring a laptop with them, ideally one they are accustomed to using, with a Microsoft Windows operating system and MS Excel loaded. Laptops may be rented from Financial Mechanics for an additional charge.