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    Just a quick question, probably silly as I guess that they would be,

    But is tax deducted from any bonuses you earn at the end of the year?

    Thanks
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    Quick answer - Yes.
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    i think one of the reasons banks pay bonuses is because they use their balance sheets (equity) for their business activities such as trading etc.
    salaries for the next 12 months have to go down as a current liability on the balance sheet but a bonus obviously doesn't, so it dramatically reduces the liabilities on the balance sheet which of course increases total equity (think about goldman sachs, they pay about $25 billion in bonuses a year, if the company is levered 12:1 then thats $300 billion more buying power)

    sound about right?
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    (Original post by drexelburnham)
    i think one of the reasons banks pay bonuses is because they use their balance sheets (equity) for their business activities such as trading etc.
    salaries for the next 12 months have to go down as a current liability on the balance sheet but a bonus obviously doesn't, so it dramatically reduces the liabilities on the balance sheet which of course increases total equity (think about goldman sachs, they pay about $25 billion in bonuses a year, if the company is levered 12:1 then thats $300 billion more buying power)

    sound about right?
    Go back to school mate.
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    Yup quite heavily
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    (Original post by drexelburnham)
    i think one of the reasons banks pay bonuses is because they use their balance sheets (equity) for their business activities such as trading etc.
    salaries for the next 12 months have to go down as a current liability on the balance sheet but a bonus obviously doesn't, so it dramatically reduces the liabilities on the balance sheet which of course increases total equity (think about goldman sachs, they pay about $25 billion in bonuses a year, if the company is levered 12:1 then thats $300 billion more buying power)

    sound about right?
    From that comment, your syaing that banks hide $25bn of bonus liabilities from there balance sheet............... Bonuses are accrued the same way wages and salaries are.

    Even if they did not disclose the bonuses as liabilities in the balance sheet, when they are paid they will hit the P&L which in turn will hit the equity section of the balance sheet.
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    i dont study accounting so im just going by what I got taught by someone who works at a BB. point is... yes they are taxed
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    (Original post by TheBhramaBull)
    Just a quick question, probably silly as I guess that they would be,

    But is tax deducted from any bonuses you earn at the end of the year?

    Thanks
    Yep, bonuses are taxed. Think about it, if it were only salaries that were taxed, and if bonuses escaped taxation, then bankers (and all workers for that matter) would be take a nominal salary of £1 per year, and just take the rest of their income in bonus.
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    (Original post by Big_Dave)
    From that comment, your syaing that banks hide $25bn of bonus liabilities from there balance sheet............... Bonuses are accrued the same way wages and salaries are.
    maybe I'm being stupid here but I don't see how a discretionary payment a year in the future would be accounted for in the same way as regular, contractually agreed salary payments.
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    (Original post by Chewwy)
    maybe I'm being stupid here but I don't see how a discretionary payment a year in the future would be accounted for in the same way as regular, contractually agreed salary payments.
    On the accruals principle expenses shuld essentially be reflected in the period in which they were incurred. So if the bonus related to the prior year then it should reflected in that period, it depends on whether there was an obligation to pay the bonus at the year end. Most bonuses are contractually agreed at a minium and maxium, therefore at the end of each year bonuses are accrued for.
 
 
 
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