Atlas Iron Limited Tax Analysis

This assignment delves into the taxation practices of Atlas Iron Limited. It requires an analysis of their reported tax amounts, focusing on potential surprises, interesting aspects, and difficulties encountered in their tax planning process. The analysis should consider accounting rules, corporate governance, and the impact on stakeholders.

Running Head: Corporate Accounting 1
Project Report: Corporate Accounting

Corporate Accounting 2
Introduction.......................................................................................................................3
Que 1.................................................................................................................................3
Que 2.................................................................................................................................3
Que 3.................................................................................................................................4
Que 4.................................................................................................................................5
Que 5.................................................................................................................................6
Que 6.................................................................................................................................7
Que 7.................................................................................................................................7
References.........................................................................................................................8

Corporate Accounting 3
Introduction:
For this report, annual report of Atlas Iron Limited has been analyzed to evaluate the
company’s liability of tax and its annual payment to the government.
Que 1:
Annual report of Atlas Iron limited has been evaluated and it has been found that the
equity of the company has been divided into 3 parts which are as follow:
 Share capital
 Reserves
 Accumulated losses
(Atlas Iron limited, 2018)
Share capital is the total amount which is raised by the company through exchanging
its stock against the money in the stock exchange market. It reflects about the paid up capital
of the company and other assets which had been given to the stakeholders of the company
against the stock of the company. It has been found through the annual report of Atlas Iron
limited that equity capital of the company has been raised by 19.5% from 2016 in 2017. The
current equity capital of the company is $ 3, 22,248 which used to be $ 2,69,666 in 2016.
Further, it has been found that the reserves of the company have been lower in 2017 by
2.89% (Yang et al, 2015). Moreover, the accumulated losses of the company have been lower
and the share capital has been enhanced.
Equity (Amount in dollar)
($)
2017 2016
Changes
Share capital $ 22,03,203 $ 21,97,388 0.26%
Reserve $ 40,816 $ 42,030 -2.89%
Accumulated Losses $ -19,21,771 $ -19,69,752 -2.44%
Total equity $ 3,22,248 $ 2,69,666 19.50%
Que 2:

Corporate Accounting 4
Further, the tax amount which has been paid by Atlas Iron limited to the government
has been analyzed. This amount has been charged over the total profit of the company. Atlas
Iron limited is not paying a single penny of profit to government. According to the below
table, the profit of the company has been positive in 2017 and still, the company has used the
policies of effective tax planning and controlled over the tax expenses of the company
(Bekaert and Hodrick, 2017). Thus the tax amount of the company has been reduced. But
through the analysis and study over annual report of the company, it has been found that this
company is required to manage the same effective tax planning.
(Atlas Iron limited, 2018)
Que 3:
Moreover, the annual report of the company explains that the tax expenses shown in
the income tax notes are $ 14,394,000 (30% of the total profit of the company) but the
company has deducted the total amount through temporary differences particulars and has not
paid a single penny to the government. The above table and the study over annual report of
the company express that the company did not pay the tax amount and thus this amount must
be shown by the accountant in the balance sheet of the company under the heading of
outstanding tax expenses. But it has not been shown in the annual report of the company.
Following differences has taken place into the tax amount of the company:
 The main reason of the differences is the fault of the accountant that he has not shown
the amount of tax in the balance sheet of the company which has not been paid by the
company in current year and could be paid in 2018 (Cheung and James, 2017).
 The taxation operations of the company are different as the proper accounting policies
and regulations have not been followed by the company.

Corporate Accounting 5
 Further, the calculations and the analysis have not been done by the management of
the company in a proper manner and thus the differences have taken place into the
taxation amount of the company.
The above given differences are related to the income statement, balance sheet and the
accounting rules of the company. The accounting rules of depreciation, bad debts, donation
recording etc of the company is quite different and the income tax rules AASB-122 has not
been followed by the company properly as well.
Que 4:
Further, the study has been done over the deferred tax liabilities of the company and it
has been found that the tax liability of Atlas Iron Limited is AUD $ 0. This deferred tax
amount must be evaluated and carried forward by an organization till a limit only which is
quite reasonable for the company and which has been calculated according to the accounting
rules. Therefore, it has been found through the annual report of Atlas Iron limited that the
deferred tax of the company is nil. And thus no amount has been shown by the company in its
balance sheet. Further, it has also been considered by the company that the accounting
income and the paid amount by the company of tax are not equal. And due to it, the deferred
income tax of the company is nil (Shantapriyan et al, 2014).
Such as, if an organization calculates the tax amount which is quite higher than the
actual tax amount of the company than the amount must be shown under the deferred tax
assets of the company according to the accounting rules and the regulations of the company.
And if the, calculated tax amount of the company is quite lower than the actual tax amount
of the company than the amount must be shown under the deferred tax liabilities of the
company according to the accounting rules and the regulations of the company.
According to the below table, it has been found that the tax amount of the company is
nil and thus the deferred tax of the company does not fall in the category of assets as well as
the liabilities in the balance sheet of the company.

Corporate Accounting 6
(Atlas Iron limited, 2018)
Que 5:
Further, the annual report of the company has also been evaluated and it has been
found that the total current tax assets of the company is nil which express that the company
do not have any current tax obligations as well as the income tax payable of the company
expresses that the nil amount has been changed by the company under deferred tax liabilities.
It expresses that this company does not have any tax payable amount and in 2016, the tax
payable of the company was 0 as well thus no amount has been deducted from the total tax
amount of the company (Amarasinghe, 2016). The below table express about the income tax
payable of the company:
Particular(AUD $) 2016 2017
Income tax payable 0 0
Further, it has been evaluated that why the income tax expenses are not equal to the
tax payable of the company. For the answer of this questions, it has been found that the
income tax expenses of the company is 0 and that is why the tax payable amount of the
company is 0 as well as company don’t have any tax obligation in current year.

Corporate Accounting 7
Que 6:
Further, the study has been done over the income tax expenses of the company and it
has been found that whether the income tax expenses and paid income tax amount is same or
not. For this analysis, the income statement and the cash flow statement of the company has
been analyzed and it has been found that the income tax payable amount is zero in the profit
and loss account of the company and at the same time, the paid tax amount of the company is
also zero according to the cash flow statement of the company (Zhuang, 2016).
This evaluation expresses that the tax expenses of the company is zero and thus the
paid amount of the company is also zero. And both the amount of the income tax expenses
and paid amount is equal.
Que 7:
Further, through the analysis, it has been found that this company is not using the
taxation system in a surprising way, through the analysis and the study, various surprising,
interesting and difficulties have been faced which are as follows:
Interesting thing about the recorded its entire tax amount
Through the analysis, it has been found that the main interesting aspect about the recording of
its total tax amount is connected to tax recording according to the accounting rules and
regulation as well as the income tax rules AASB-122 (Yang et al, 2015).
It expresses that the company is managing the effective tax planning.
Surprising thing about the recorded its entire tax amount
Further, this analysis expresses about various surprising factors about the taxation planning of
the company. The main surprising aspect about the tax amount recording of Atlas Iron
limited is its corporate governance program as well as the procedure of recording the tax in
the company’s annual report. the tax liabilities and tax assets could not be maintained by the
company in a single time.
Difficulty in recorded the entire tax amount
Further, the difficulties have been analyzed in the taxation planning of the company, Atlas
Iron limited. This company has faced difficulties in managing the effective tax planning and
making the tax amount zero. Further, it would also be difficult for the stakeholders of the
company to analyze the tax planning of the company.

Corporate Accounting 8
References:
Amarasinghe, A.A.S.B., (2016). Optimized Taxi Allocation for Time Bound Taxi
Requests (Doctoral dissertation).
Atlas Iron limited, annual report, Retrieved on 3rd January, 2018 from
http://www.atlasiron.com.au/site/PDF/8211_1/2017AnnualReporttoshareholders
Bekaert, G. & Hodrick, R., (2017). International financial management. Cambridge
University Press.
Brigham, E.F. & Ehrhardt, M.C., (2013). Financial management: Theory & practice.
Cengage Learning.
Cheung, E. & James L. (2017). "Readability of Notes to the Financial Statements and the
Adoption of IFRS." Australian Accounting Review 26.2 (2016): 162-176.
Shantapriyan, P., O'Donnell, K., Streeter, J. & Hicks, B., (2014). Getting it Right: Directors’
Assessment of Information.
Yang, C.C., Ho, S.Y., Chang, C.H. & Mingru, Z., (2015). A Study of Real Estate Regulation
and the Taxation System. Journal of Statistics and Management Systems, 18(1-2),
pp.177-187.
Zhuang, Z., (2016). Discussion of ‘An evaluation of asset impairments by Australian firms
and whether they were impacted by AASB 136’. Accounting & Finance, 56(1), pp.289-
294.