This support note applies to:
- AO Statutory Reporter (NZ)
- AE Statutory Reporter (NZ)
- Workpapers (NZ)
We've made some improvements to the Tax Note in Statutory Reporter version 5.4.29.
The Tax Note provides a reconciliation of profit in the Profit and Loss Statement to the Taxable profit amount shown in the Tax return.
The Tax Note allows you to make several types of adjustments such as:
- non-deductable expenses and non-assessable income
- timing differences (deferred holiday pay, provision for doubtful debts)
- losses brought forward.
to arrive at a taxable profit.
The steps below are a guide on how to set up your ledger for reporting in the Tax Note.
In your Chart of Accounts, create an "off-balance sheet" account to record the amounts to be adjusted in the Tax Note.
For example, using an AO Classic General Ledger chart of accounts:
- 996/60 Deferred Income / Expense Opening Balance
- 996/65 Deferred Income / Expense Closing Balance.
You can use multiple Opening Balance or Closing Balance accounts to show separate types of deferrals, or you can choose to have just one account to show only the difference between Opening and Closing balance.
You can rename this account to be more specific to the deferred expense or income, such as "Deferred Holiday Pay - Opening Balance"
If you have tax losses brought forward from prior years, create an account to record Tax losses brought forward. You'll also need a contra account to balance your journals.
Your chart of accounts should look similar to the following:
|996/60||Deferred income / expense Opening Balance|
|996/65||Deferred income / expense Closing Balance|
|996/70||Losses brought forward|
In the Workpaper period, add a journal to record the current year Income Tax expense and any balances to be adjusted. For example:
To record current year Income Tax expense:
|631/01||Provision for tax liability||7728.00|
|631/98||Deferred tax asset||280.00|
To record balance of deferred income, expense and loss accounts:
|996/60||Deferred income / expense Opening Balance||5000.00|
|996/65||Deferred income / expense Closing Balance||6000.00|
|996/70||Losses brought forward||2000.00|
The accounts needed for the tax note need to be mapped into the “Other financial information” account groups. This may require duplicate mapping, if these accounts are also mapped to the Balance Sheet. The following mapping is required:
|Account||Map to group...|
|Tax Expense (480 – 480/99)|
Profit or Loss statement > Income Tax and other > Income tax
|Provision for tax (631/01)|
Other financial accounts > Tax note > Tax provision
|Deferred tax asset (631/98)|
Other financial accounts > Tax note > Other
Balance Sheet > Current Assets (DR balances) or Current Liabitlities (CR balances)
|Losses brought forward (996/70)||Other Financial accounts -> Tax losses|
Deferred Income / Expense Opening Balance (996/60)
Deferred Income / Expense Closing Balance (996/65)
|Other financial accounts -> Tax Note -> Deferred income / expense|
Using this approach, your Financial Statements should look similar to the following.
In this example, we've used the following balances:
- $27,300.00 of Accounting income
- $1,300 of non-deductible expenses
- Deferred accrued holiday pay:
- $5,000 at the beginning of the year
- $6,000 at the end of the year (therefore actual amount of deferred tax at end of year is $6,000 x 28% = $1,680)
- $2,000 of ax losses brought forward of
- $1,500 provisional tax paid during the year.
Notes to Balance Sheet - Tax Note
MYOB INTERNAL STAFF ONLY