Definition of ACT
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Association of Corporate Treasurers (ACT): The Association of Corporate Treasurers (ACT) represents the interests of professionals responsible for managing corporate treasury activities. This includes cash management, risk management, corporate finance, and treasury compliance. ACT provides education, advocacy, and networking opportunities for its members.
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Advance Corporation Tax (ACT): Advance Corporation Tax (ACT) was a pre-paid tax on company dividends in the United Kingdom, which existed until it was abolished in 1999. Companies paid ACT when they distributed dividends, which could then be offset against their corporation tax liability. This system was designed to prevent double taxation of dividend income.
Examples
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Association of Corporate Treasurers:
- A corporate treasurer affiliated with the ACT helps their organization manage liquidity, investments, and financial risks.
- An organization may seek certification from ACT, such as the CertICM (Certificate in International Cash Management), to enhance the credentials of its treasury team.
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Advance Corporation Tax:
- A UK-based company paid ACT when distributing dividends to shareholders prior to 1999.
- ACT was set off against the corporation tax liability for the same accounting period, thereby reducing the total tax payable by the company.
Frequently Asked Questions
What are the main functions of the Association of Corporate Treasurers (ACT)?
ACT supports corporate treasury professionals by providing education, advocating for the industry, and offering networking opportunities. The organization also sets best practices and promotes the treasury profession globally.
What replaced the Advance Corporation Tax system in the UK?
Advance Corporation Tax was abolished on 6 April 1999. It was replaced by a system where companies only pay corporation tax and there’s no separate pre-payment when distributing dividends.
Why was Advance Corporation Tax (ACT) abolished?
ACT was abolished to simplify the tax system and to eliminate the complexities and disadvantages that it created, particularly for small companies and groups with non-resident parent companies.
Can you still claim relief for ACT paid before its abolition?
Yes, companies can carry back surplus ACT paid up to six years before it was abolished to mitigate their corporation tax liabilities from earlier periods.
Are there specific qualifications provided by the Association of Corporate Treasurers (ACT)?
Yes, some certifications include the Certificate in Treasury, the Certificate in International Cash Management (CertICM), and the Diploma in Treasury Management.
Related Terms
- Corporate Treasurers: Professionals responsible for managing an organization’s liquidity, investments, and financial risks.
- Corporation Tax: A tax imposed on the profits of a corporation.
- Double Taxation: The tax principle referring to income taxes paid twice on the same source of earned income.
- Dividends: A portion of a company’s earnings distributed to shareholders.
- Treasury Management: The administration of a company’s cash flow as well as the related aspects of financial management.
Online References
Suggested Books for Further Studies
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“Treasury Management: The Practitioner’s Guide” by Steven M. Bragg
- An in-depth exploration of treasury functions and best practices.
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“Corporate Treasury and Cash Management” by Rohan Douglas
- A comprehensive guide to managing cash and financial risk in corporations.
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“Taxation in the United Kingdom” by J.A. Kay and M.A. King
- Detailed insights into the taxation system, including historical context and the evolution of ACT.
Accounting Basics: “ACT (Association of Corporate Treasurers and Advance Corporation Tax)” Fundamentals Quiz
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