Tax Amount Recording Analysis

This assignment analyzes The Citadel Group Limited's 2017 annual report, specifically examining the company's recording and presentation of tax amounts. The analysis explores surprising elements in the reporting process, identifies challenges in determining the factors influencing the tax amount, and ultimately concludes that the company effectively presents its tax information despite a significant increase in payments compared to the previous year.

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Project Report: Corporate Accounting

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Executive summary
This Report has been prepared to evaluate the tax expenses, liabilities and the tax
assets of the company. This report explains about the significant changes in the operations
and the tax expenses of the company. In this report, annual report of The Citadel Group
Limited has been evaluated and the tax expenses, current tax assets and tax payable amount
of the company has been evaluated. This report explains that THE CITADEL GROUP
LIMITED has maintained and presented the tax amount in a nicely form. Various level and
position of tax has been evaluated in this report.

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Contents
Introduction.......................................................................................................................4
Equity of the firm..............................................................................................................4
Firm’s tax expenses..........................................................................................................6
Accounting income...........................................................................................................6
Deferred tax assets and liabilities.....................................................................................7
Income tax payable or current tax assets..........................................................................8
Income tax expenses.........................................................................................................9
Financial statement evaluation.........................................................................................9
Conclusion......................................................................................................................10
References.......................................................................................................................11
Appendix.........................................................................................................................12

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Introduction:
Evaluation of financial figures, expenses, liabilities and assets of an organization is
mandatory to evaluate the position of the company and the rules and regulations which have
been followed by the company while preparing the financial reports of the company. In this
report, annual report of The Citadel Group Limited has been evaluated and the tax expenses,
current tax assets and tax payable amount of the company has been evaluated. This report
explains about the significant changes in the operations and the tax expenses of the company.
The Citadel Group Limited delivers and develops the management and the integration
of service solutions to the government department (state and federal). The operations of the
company are in Australia. Specially, the company manages functions in complex
environment through know how and anywhere anytime basis. The main operations of the
company are operated through its head office which is situated at Symonston in Australia
(Bloomberg, 2018).
Equity of the firm:
Annual report of the company has been evaluated to identify the items of equity and
the changes in the items of equity in current year. Following is the items of equity of the
company:
 Contributed equity
 Reserves
 Retained earnings
 Capital and reserves which are attributed to owners of the company
 Non controlling interest (Annual Report, 2017)

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(Annual Report, 2017)
Contributed equity explains about the total paid up capital of the company and the
assets of the company which has been contributed by the shareholders against the stock of the
company. The contributed equity of the company is $ 5,37,22,000 in 2017 and $ 4,81,72,000
in 2016 which explains that the contributed equity of the company has been enhanced by
11.52% in 2017. More to it, reserves and the retained earnings are the part of total profit of
the company which is kept by the company to maintain the sudden risk and enhance the
financial position of the business. Reserves and retained earnings of the company have been
enhanced by 40.74% and 34.85% in 2017 (Garrett, Hoitash and Prawitt, 2014). Non
controlling interest is the part of equity which has been enhanced by 23.03% in 2017.
2017 2016 Changes
$'000 $'000
Equity
Contributed equity 53,722.0 48,172.0 11.52%
Reserves 1,413.0 1,004.0 40.74%
Retained earnings 34.85%

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15,872.0 11,770.0
Capital and reserves 71,007.0 60,946.0 16.51%
Non controlling
interest 4,444.0 3,612.0 23.03%
Firm’s tax expenses:
Further, it has been evaluated that the tax expenses are the amount which is supposed
to pay by the company to the government of the country. Tax amount is the amount that is
charged by the government from the total profit of the company. The income tax expenses of
the company have been evaluated and it has been found that current tax amount of the
company has been enhanced a lot. Earlier, the tax expenses of the company were $ 25,05,000
which has been enhanced to $ 71,01,000. It expresses that the company has not maintained
any particular policy and plan to reduce the expenses of the tax and have paid a huge amount
to government as tax expenses (Brigham and Ehrhardt, 2013). Company should maintain an
effective tax planning policy to reduce the level of tax.
(Annual Report, 2017)
Accounting income:
After evaluating the annual report of the THE CITADEL GROUP LIMITED, it has
been found that the total amount of the tax must be $ 6394000 according to the accounting
income of the company (21,312,000*30% = 6394000). But the actual tax expenses of the
company are $ 5906000. These differences have occurred due to fair value increment, R&D
aspects, dividends, imputation credits discount unwinding, and income tax provisions etc. It

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has been found that the tax amount has been presented and given by the company on a fair
basis (Bekaert and Hodrick, 2017). The company has taken the concern of entire aspects
related to the tax and used it to reach over the final amount of tax which should be paid by the
company to the government.
(Annul Report, 2017)
The above table explains that the main reason behind the difference in the tax amount
is the subsidiaries, investment, changes in the prices of the assets, dividends etc. the company
has followed the AASB 112, the accounting rule to calculate the total tax amount. Same
study has been evaluated over the competitive company TATTS GROUP LIMITED, and it
has been found that this company has also managed the tax amount according the AASB and
the few changes have taken position into the tax expenses of the company.
Deferred tax assets and liabilities:
Further, the deferred tax assets and differed tax liabilities of the company has been
evaluated to identify the reason that why they have taken place into the balance sheet of the
company. The calculations of the deferred tax assets and liabilities shave been identified first
and it has been found that the deferred tax liabilities of the company has been enhanced by $
8,83,000 in 2017 (Li and Tran, 2016).

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More to it, the study has been done over the total amount of the tax which has been
presented in the balance sheet of the company as deferred tax assets and differed tax
liabilities. And it has been found through the evaluation that deferred tax liabilities of the
company is $15,22,000 which was nil in 2016 and the deferred tax assets of the company is $
61,000 which was also nil in 2016. Deferred tax assets and liabilities are mainly the
difference between the taxable income and the accounting income of the company. It explains
that the few differences have taken position into the accounting profit and tax expenses in
current year and management is suggested to look over these aspects and resolve it (Tran,
2015).
If the accounting profit of the company is higher than the tax amount of the company
according to the AASB rules and the regulations than the amount must be charges as deferred
tax liabilities by the company and if the accounting profit of the company is lower than the
tax amount of the company according to the AASB rules and the regulations than the amount
must be charges as deferred tax assets.

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(Annual Report, 2017)
Income tax payable or current tax assets:
Further through the annual report of THE CITADEL GROUP LIMITED, it has been
evaluated that the no amount has been charged by the company as income tax payables and
the current tax assets in the financial position statement of the company which explains that
the entire amount of tax has been paid by the company in the financial year 2017 itself. No
liabilities and assets related to the tax amount have been held by the company right now.
Income tax payables are the total amount which have not been paid by the company and have
to pay by the company in next financial year. At the same time, current tax assets are the
amount which has been paid by the company to the government in advance. Thus, it explains
that the total balance amount have been paid by the company in 2017 (Pawsey, 2016).
Further, the analysis over the annual report of TATTS GROUP LIMITED explains that the
company has tax payables which would be paid by the company in next financial year. Both
the companies are following the internal accounting rules and AASB rules to manage and
prepare the financial reports.
Income tax expenses:
Further, the cash flow statement of the company has been evaluated to identify that
whether the entire amount of tax have been paid by the company or not. These evaluations
have been done to identify that the preparation of the financial reports have been done
honestly or any fraud is involved into the financial reports of the company. Cash flow
statement express about the total cash amount which has been paid by the company and the
total cash amount which has been received by the company in a particular period. The current
tax cash outflow of the company is $ 54,21,000 which explains that the entire tax expenses
have been paid by the company to the government in 2017 (Annual Report, 2017).
The total tax amount of the company was 59,06,000 out of which, deferred tax assets
and deferred tax liabilities shave been balanced by the management and the professionals and
the rest tax amount has been paid by the company to the Australian government. It explains
that the company has not misplaced any amount and have presented the entire operations
related to tax in the financial reports of the company nicely. The same study has been done
over TATTS GROUP LIMITED and it has been found that the company has also presented
the right figures in its annual report (Annual Report, 2017).

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Financial statement evaluation:
In addition, it has been found that the above study was quite interesting; various new
things have been learnt while conducting this study over the tax expenses of the company.
Though the study was bit difficult and various surprising facts have been learnt while this
study. Following are few of them:
Interesting aspects related to the tax amount recording:
Through the evaluation, it has been found that the company has followed all the
international and Australian accounting rules to record and present the tax amount in its
financial reports. Though, the tax amount of the company has been enhanced by a great level.
Confusing aspects related to the tax amount recording:
Further, it has been found that why the deferred tax and liabilities have actually taken
place. The management and the accountant of the company must take the concern of all the
related factors earlier so that the deferred tax liabilities and assets could be nil like it was in
2016.
Surprising aspects related to the tax amount recording:
The main surprising element was the entire process through which the tax amount has
been recorded and presented by the company in its annual report. The figures have been
presented by the company very nicely.
Difficult aspects related to the tax amount recording:
The difficult part of this study was finding about the factors which had impacted on
the tax amount and which have reduced the tax amount from the accounting profit’s tax
amount.
Conclusion:
To conclude, THE CITADEL GROUP LIMITED has maintained and presented the
tax amount in a nicely form. The study over tax amount express that a huge amount has been
paid by the company as tax amount to the government in the current year from last year but
the presentation and recording has been done by the company in a good manner.

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References:
Annual Report, 2017. TATTS GROUP LIMITED. Retrieved on 17th Jan 2017, from
http://member.afraccess.com/media?id=CMN://2A1029784&filename=20170817/
TTS_01884645.pdf
Annual report, 2017. THE CITADEL GROUP LIMITED. Retrieved on 17th Jan 2017, from
http://investors.citadelgroup.com.au/investors/?page=Annual-Reports
Bekaert, G. and Hodrick, R., 2017. International financial management. Cambridge
University Press.
Bloomberg, 2018. THE CITADEL GROUP LIMITED. Retrieved on 17th Jan 2017, from
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=39927862
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Garrett, J., Hoitash, R. and Prawitt, D.F., 2014. Trust and financial reporting quality. Journal
of Accounting Research, 52(5), pp.1087-1125.
Li, E.X. and Tran, A.V., 2016. An Empirical Analysis of the Tax Burden of Mining Firms
versus Non-Mining Firms in Australia. Austl. Tax F., 31, p.167.
Pawsey, N., 2016. Project: Review of IFRS adoption in Australia.
Tran, A., 2015. Can taxable income be estimated from financial reports of listed companies in
Australia?. Browser Download This Paper.

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Appendix:

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