Taxation Rules And Regulations On Monish -Myassignmenthelp.Com

Question: Discuss About The Taxation Rules And Regulations On Monish? Answer: Introducation The annual report of Monash IVF Group Ltd has been analysed with a view to evaluate the stock and contributed capital of company Common stock Contributed capital Accumulated profit Retained earnings and reserve. It is observed that common stock is the accounting of money given by shareholders for the ownership. On the other hand, Contributed capital is also the same amount but not redeemable unit and unless company is wind up. Accumulated profit is the overall profit collected by the company since then. Retained earnings and reserve is the amount of profit which has not distributed by company to its stakeholders (Blouin and Robinson, 2014). Equity (Amount in dollar million) ($M) 2017 2016 Common stock 428 423 Accumulated profit (113) (104) Retained earning 161 161 Total equity 287 288 Discussion on the retained earning Company has maintained stable retained earnings in both years. However, the main objective of not plugging back of this capital in its business is based on the return on capital employed of company. Monash IVF Group Ltd is not finding a good reason to expand its business as company is having sluggish market conditions. It is considered that tax is the amount which is charged on the profited of company. Monash IVF Group Ltd has paid tax amount AUD $ 12 million. Company has Monash IVF Group Ltd has maintained stable tax payment since last two year which is good indicator for company (Brondolo, 2009) Particular(AUD $ in million) 2015 2016 Income tax expenses 12 12 Company has to adopt proper tax planning process with a view to reduce the tax payment. In addition to this, company has increased deferred tax liabilities by AUD $ 1 million. After evaluating the annual report of Monash IVF Group Ltd, it is observed that tax expenses shown in the books of account of company is not same as the amount computed by charging 30% tax on the profit of company. It is considered that Monash IVF Group Ltd has paid tax AUD $ 12 million. On the other hand, if tax rates time tax payment is computed it would be around 30% % net profit i.e. 41* 30%= AUD 12.3. However, this is very less amount of tax differences. It has aroused due to difference between the accounting and taxation law rules and regulations (Monash IVF Group Ltd, 2017) Explain why this It is considered that treatment of charging tax on the earned profit is different in accounting and income tax rules and regulations. The tax expenses shown in the financial statement of company would be based on the income tax rules and regulations. On the other hand, tax rate computed on the net profit would be based on the profit computed as per the rule and regulations. There are main two reasons of differences. First is related to recording of revenue and expenses in profit and loss account as per the accounting and income tax rules and regulations. As there is different recording of expenses and revenue, such as charging depreciation, recording donation and bad debts as per the accounting and income tax rules and regulation as per AASB-122. The annual report of Monash IVF Group Ltd has shown that it has recorded deferred tax liabilities amount AUD $ 2 million in its non-current liabilities. This deferred tax amount needs to be recognized and carried forward to the extent that is reasonably sufficient for the future taxable income. It is analysed that Monash IVF Group Ltd has paid lower tax as per its income tax rules and regulation as compared to its tax computation based on the accounting rules. .therefore, payment beyond that has been kept at the deferred tax liabilities. It reflects that company may need to pay this tax payment in future if taxation rules and regulations policies changes (Brigham and Ehrhardt, 2013). On the other hand, if Monash IVF Group Ltd pays higher tax as per the income tax rules as per the accounting rules and regulations then it needs to charge in its books of account of company. Particular (AUD $ million) 2017 2016 Deferred tax assets 2 1 Current tax assets and other income tax payable by company With the ramified changes in taxation rules and regulations, company needs to book taxation payment entries in its books of account to keep the record of the tax payment. In Monash IVF Group Ltd, company was having AUD $ 10 million tax payable which it has recorded in its current liabilities section. It reflects that company may need to pay current tax to government in near future (Gitman, Juchau and Flanagan, 2015). Deferred tax payment of Monash IVF Group Ltd in 2017 is zero. Company has paid all of its deferred tax to government AUD $ 10 million in 2016. Particular(AUD $ in million) 2016 2017 Income tax payable 10 0 Why income tax expenses is not same as the income tax payable It is evaluated that income tax payable of company was AUD $ 10 million in 2016 which has gone down to zero. It is the amount of tax which would be payable by Monash IVF Group Ltd in near future. On the other hand, income tax expenses are the amount charged on the profit and loss account of company and would be deducted from its net profit. Income tax payable includes all the tax payment including for all the years. In addition to this, income tax expenses are the charged only on the current year profit of company. Is the expenses shown in the income statement is not same as the income tax paid in its cash flow statement? If not After evaluating the annual report of Monash IVF Group Ltd, it is considered that income tax expenses shown in the income statement is not same as the income tax paid in its cash flow statement (Evers, Meier, and Spengel, 2014). Why are the differences? Cash flow statement reflects the cash inflow and outflow of money in the current year irrespective of the fact that it relates to current year or previous year. The cash flow of income tax reflects the tax payment of company irrespective of the fact that it relates to current year or previous year. The income tax shown in the cash flow statement is zero. It reflects that in current year company has paid zero amount of tax. On the other hand, income tax expenses shown in the profit and loss account is the amount of tax charged on the profit and loss account. The current tax expenses of Monash IVF Group Ltd is AUD $ 12 million. Now in the end, it could be inferred that each and every statement of company has its own recording process and values. These documents serve their own particular objects. There is zero amount of tax payment in the current year of Monash IVF Group Ltd. Therefore, there is no amount shown in the cash flow statement of company. Treatment of recording of tax in the books of account of Monash IVF Group Ltd Interesting thing about the recorded its entire tax amount Recording of income tax in the books of account of company is based on the taxation rules and regulations given under AASB-112. It is considered that entries for tax recording are done in the profit and loss account, balance sheet and cash flow statement. The main interesting thing about the recording of tax is related to contradiction of tax computation as per the accounting rules and regulations and taxation rules and regulations (Monash IVF Group Ltd, 2017). Surprising thing about the recorded its entire tax amount The main surprising thing about recording of tax in the books of Monash IVF Group Ltd is related to corporate governance recording and income tax rules. Company needs to block high amount in its deferred tax liabilities in case its tax computation is low as per the accounting rules while comparing the same with the taxation rules. In addition to this, Monash IVF Group Ltd can never have deferred tax assets and deferred tax liabilities at the same. Difficulty in recorded the entire tax amount Monash IVF Group Ltd has complex tax recording structure. The main problem arise when the income tax expenses is not same as per the tax rate income computation of company. Monash IVF Group Ltd has found difficult to bifurcate tax payment as per the rule and regulation given under AASB-112. New insight about the company account for the income tax The main insight about the recording of tax in the books of account is related to changing taxation rules and regulations. Company needs to be ready and alert for the taxation rules and regulation. Company might face cumbersome and complicated process while recording of taxation rules and regulation in its books of account. References Ballas, A.A., Skoutela, D. and Tzovas, C.A., 2010. The relevance of IFRS to an emerging market: evidence from Greece.Managerial Finance,36(11), pp.931-948. Blouin, J.L. and Robinson, L.A., 2014. Insights from academic participation in the FAF's initial PIR: The PIR of FIN 48.Accounting Horizons,28(3), pp.479-500. Brigham, E.F. and Ehrhardt, M.C., 2013. Financial accounting: Theory practice. Cengage Learning. Brondolo, J., 2009.Collecting taxes during an economic crisis: challenges and policy options(No. 2009-2017). International Monetary Fund. Evers, M.T., Meier, I. and Spengel, C., 2014. Transparency in Financial Reporting: Is Country-by-Country Reporting suitable to combat international profit shifting?. Gitman, L.J., Juchau, R. and Flanagan, J., 2015.Principles of managerial finance. Pearson Higher Education AU. Monash IVF Group Ltd, 2017, annual report, Retrieved on 22st January, 2017 from https://ir.monashivfgroup.com.au/Investor-Centre/?page=Annual-Report