cheap lenses australia

Accounting standards left trying to fix tax oddity

In May 2010 the Taxation (Budget Measures) Act 2010 did away with tax deductions for depreciation on buildings with an expected life of 50 years or more. That in itself had many taxpayers and their advisors shaking their heads in dismay. However, imagine the impact it has on companies with large property portfolios. This latest amendment to the tax law has resulted in many companies having a deferred tax liability.

The effect of these deferred tax liabilities is that companies’ accounts may not reflect a “true and fair view” and may be misleading for investors because even though it affects the net profit, it does not have any relevance to the performance of the company per se.

It is now up to the local Financial Reporting Standards Board (FRSB) to sort this situation out. Due to the fact that the IFRS are exactly that – an international standard – an amendment to the international rules is required so that New Zealand remains aligned with the international standard.

Georgina Bond sets the situation out nicely in her article in The National Business Review (August 27, 2010, at p. 12). What I find telling is that apparently government was aware of the reporting issues that would arise, as you’d expect it to be, when drafting the legislation but has left it up to the FRSB to find a solution. So be on the look out for changes to the accounting standards sometime in future.

No Responses

Be the first to leave a comment!

Write a Comment

Take a moment to comment and tell us what you think. Some basic HTML is allowed for formatting.

*

Recent comments

  • Peter: When you have more than one job all your income is added up and you pay tax on the total income amount. For...
  • Joanne Martin: Hi Would you be able to email me to discuss a small company that is an LTC which I need some advice on...
  • Rizwana Saheed: You are on the right track that there is an exemption when employees work overtime but whether or not...
  • bryan: as a group of employees we get paid meal money if we exceed 11hrs on any day. Employer says he wants to tax...
  • linda: My mother is 94 and has dementia. With govt assisted carers she is still living in a home gifted within the...
  • Sharon: Hi Daniel, Can you please advise how owners of a profit-making LTC pay themselves? The owners used to pay...
  • Another Anne: My Dad is in care on full subsidy. I am EPOA. Are we able to gift some money to my brother in UK so...
  • Twagilayesu Isaya: I agree with the author of this article that Inland Revenue Department need to provide clear...
  • Quinn: Hi. I would like some clarification regarding the valuation of the investments component of the owners basis...
  • QROPS Pensions: Interesting piece of writing, you always write the most useful content & TalkTax is no exception...

Upcoming Events

  • No events.

Poll

In the past 12 months, do you think the amount of IRD investigations being undertaken has?

View Results

Loading ... Loading ...

Authors

    For the moment, we have no authors