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Company Accounting Assignment

   

Added on  2020-05-01

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COMPANY ACCOUNTING AND ANALYSISAccounting For AASB Its Application And Frameworks In RL Ltd. Students' NameCourse Title Instructor’s NameInstitutional AffiliationCity and State Date of Submission

COMPANY ACCOUNTING AND ANALYSISFirst and foremost I wish to point out and correct the statement by the CEO Chris Thor concerning the tax return report that he claims it’s only what is needed for decision making. Kindly Mr CEO be informed that decision making process involves wide aspects from costing, expenses, revenue generation and allocation, asset management and of course taxation as you state therefore be informed that all these factors plus many others must be putinto consideration before making the decision not only one part of it. However, Mr CEO if the decision you claim you want to make involves the tax part alone then you can proceed with the consideration the tax return issued to you, Lo (2010.Pg 25)I now wish to handle the points and concerns raised by the CEO one by one in accordance with the lawful guidelines and regulation applicable. Reference is made to the issue raised by the CEO on payment of tax and hereby wishes to inform him that under AASB112, para.5 the law allows and requires a company not to pay any income tax at all if under certification it is operating on a loss basis Sorensen (2010.Pg 80). The firm instead is then obliged to keep the record of the same upon the filing of tax loss return that is claimable in future when offsetting the loss of the future annual profits based in Nicholas (2007.Pg 70). This regulation further outlines what is to be referred as tax loss or profit so as to distinguish what is recoverable and what ought to be paid as explained in Shaviro(2008.Pg 423). Taxation Determination TD 2007/2 reference on income tax further emphasizes the need to file tax loss return as well as safe record keeping of these documents outlining the losses so as to support tax credits in the near future Devereux(2006.Pg 41).Firms that report losses are expected to file tax loss return as well as safe keep of record for compliance purposes and tax audit if any.The board should therefore know that there exist no tax payment done in this year from the income since the company is making loss, however what probably the CEO might be claiming to be payment is what possibly referred to as tax loss return in the reports that are

COMPANY ACCOUNTING AND ANALYSISdeemed to be mandatory for compliance purposes just as what would happen if we had made profit a tax profit return would be filed as per the regulation set in the Australian Business Tax Guide17, para 6.1. In addition, the reason why there is tax loss return filling is for purposes of notifying Australian Tax Office on the company tax position at the moment as well as during facilitation of tax audit process if any Richardson(2007.Pg 700). This is furtherinsisted in AASB 101, para .88 that requires disclosure of any material factor to the users in our case through filling of tax return loss we are informing ATO who is our user in the context. I however wish to take a different interpretation on the issue away from this on payment of income tax, and assume that the CEO is referring to taxes on salary, goods or services and even those withhold at source, in this case, I however, wish to inform him that we have no option of not paying this taxes whether we like it or not since these are statutory in nature and must be paid. For example,Pay As You Go there is no room for not paying these taxes simply because as long as the employees are enjoying their salary benefit up to date then the tax man(ATO) likewise need to enjoy her share, in any case, it is always collected at source. The same approach accorded to PAYG is what applies to Goods Sales Tax whereby the payment being made is just a collection being done on behalf of the tax office similar to any withholding tax that the firm standards as an agent of the principal i. e tax office hence needs to remit that amount after payment. I therefore, wish to conclude on this matter on how to treat income loss for taxation purposes by saying that it is irrational and unlawful to pay taxes as claimed by the CEO whereas in reality no gain is made and thus that payment in the company books ought to fall part of tax audit query. The tax man is considerate enough as long as all the documents are safely kept and the taxpayer is aware of his or her role for tax purposes i.e. when to act as agent and when to act as a taxpayer. The board is therefore notified that there are no traces of

COMPANY ACCOUNTING AND ANALYSISincome tax paid at all especially within this period of income tax loss but if there existed Goods Sales Tax, Pay As You GO or any other withholding tax then the payment made is justgiving what belonged to the Caesar or rather what was kept on behalf of the tax man Frank(2009.Pg 70).Concerning the issue raised on the income statement, I wish to explain this basing it on the information raised by the CEO on payment of tax while we are making profits Zander(2015.Pg 650). It is generally acceptable for a business to make profit or loss as outlined in AASB101, paragraph 10A, therefore it is in accordance with the law for any firm to present its income statement with a loss in any case this is why it is referred to a statement of profit or loss and other comprehensive income in AASB101,para.10(b).We can’t therefore assume that we are only in business for purposes of profit making alone then what would occur if the market does not favour your business? Will you force the market to consider you? This question clears the doubt on income loss reporting.Just as outlined above there are exist no permanent good days in business today the business may be booming only to get into recession the following day thus no absolute best moment hence the possibility of a loss or profit occurring. Whether a business is showing going concern concept or not there exist an obligation of reporting its performance via the useof profit or loss income state since the users of the information have a right to that information Hamilton(2014.Pg 24).I therefore, justify my sentiments by stating that there is nothing wrong with the statements if in reality a loss was reported. More so if the loss is reported and tax is being paid on this loss still there is no problem with the income statement the problem is with the person paying or persons acting on behalf of the company on tax matters since they seem not to know on how to account for tax in case a firm makes losses.

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