ACCA Taxation (F6) Practice Exam 2026 – All-in-One Guide to Master Your ACCA Taxation Exam Success!

The closing year basis (CYB) refers to the method of assessing tax based on the profits that are earned during the current accounting year. When a taxpayer remains on CYB, they report and pay tax on the income recognized until the end of the tax year. This means that the total profits for the year need to be calculated and used for the tax assessment without any need to estimate future income or make approximations based on prior years.

The process allows for an accurate reflection of the taxpayer's financial situation for that tax year. Keeping everything aligned until the tax year ends ensures that all relevant profits within that specific period are captured and assessed correctly for tax purposes, making it a clear and straightforward approach.

The other options do not accurately describe the closing year basis: using estimation doesn't reflect the actual profits earned, assessing tax solely on the last month's profits neglects the overall performance during the entire year, and relying on prior year profits could lead to discrepancies that do not represent the current financial standing of the taxpayer. Thus, the correct choice accurately captures how tax is determined under a closing year basis.