This Certificate Level and ICAEW CFAB exam guide ensures you’ll approach Tax Fundamentals with the right strategy.
At a glance
Sitting: on demand
Duration: 2 hours
Format: 40 multiple-choice, multi-part multiple choice, multiple response or numeric entry questions (80%); two scenario-based questions (20%)
Pass mark: 55%
Syllabus weighting:
- Objectives, types of tax and ethics (10%)
- Administration of taxation (20%)
- Income tax and National Insurance contributions (22%)
- Capital gains tax & inheritance tax (14%)
- Corporation tax and company gains (16%)
- VAT & Stamp taxes (18%)
Need to know
Tax is one of the essential areas of technical knowledge that any chartered accountant needs. It’s important to have an understanding of how the economy and society works, and tax is a key part of that. As Benjamin Franklin famously put it, it’s one of only two certainties in life, and whether it forms part of your day-to-day role or not, it’s something that all your clients will be concerned with. This is the foundation module for Tax Compliance and Planning at Professional Level, and underpins everything you’ll find there, taking you from little or no knowledge towards an understanding of what the different taxes are, how they fit together and how those numbers are calculated.
In terms of content, Tax Fundamentals is a broad syllabus with very detailed rules, and those rules are constantly evolving. You’ll need to cover the whole breadth, as you’ll be answering questions across each of the six syllabus areas – and in a random order. The exam consists of 40 multiple-choice questions worth two marks each, and two longer, scenario-based questions worth five marks each.
How to approach it
Nothing you’ll encounter at this level is too technical, but there’s a lot to learn. Success lies in putting the work in and making sure you’ve covered all areas of the syllabus – if you don’t know the rules, you can’t answer the questions. Bear in mind, though, that you will have access to the tax tables in the exam (via the exhibit button at the top left of the screen). The tax table that pops up will depend on the question – if you’re answering a question on VAT admin, for example, you’ll only see the VAT admin section of the tax tables – and it will look exactly the same as the one in the learning materials. If you’ve familiarised yourself with the tables and practised using them in relation to a question, you should be able to quickly find what you need – and get that question right.
The practice questions in the learning materials, workbook, question bank and mocks mirror what you’ll see in the exam. Attention to detail is important in tax, and the questions have been carefully phrased in the same way, in plain English, using the same terminology – so there won’t be any surprises, provided you’ve done plenty of practice. In a stressful exam situation, it’s easy to misread or misunderstand the question, so take your time to make sure you understand what it’s asking.
One area that might be challenging for students is the taxation of business income (company, sole trader or partnership). There are one set of rules for companies and a similar, but sometimes different, set of rules for partners and sole traders. So make sure you’re applying the correct rules to the correct situation. The order of the questions is random – there won’t be a section on income tax, followed by a section on VAT and so on – so first identify the topic. If you can identify the topic, identify who the taxpayer is and which set of rules to apply, and know where to find the answer in the tax tables, then this is a very doable exam.
Read more about Tax Fundamentals in the ACA Syllabus Handbook.
