Improvements to Tax Notes in Statutory Reporter

This support note applies to:

AO Statutory Reporter (NZ)
AE Statutory Reporter (NZ)
Workpapers (NZ)

Article ID: 31924605

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.

1. Set up "off-Balance Sheet" accounts

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:

Account Code	Description
996/60	Deferred income / expense Opening Balance
996/65	Deferred income / expense Closing Balance
996/70	Losses brought forward
996/99	Contra account

2. Add journals to record the balances in each tax account

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:

Code	Description	Debit	Credit
480/01	Tax expense	7444.00
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:

Code	Description	Debit	Credit
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
996/99	Contra account		3000.00

3. Map account groups

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 and 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

Example result

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.

Tax expense on Income Statement

Tax Note

Balance Sheet:

Notes to Balance Sheet - Tax Note

MYOB INTERNAL STAFF ONLY

CAT-28451