Subvention payments for 28% of the tax losses transferred would typically be recognised against the tax payable account, instead of being recognised as an expense. An expected 100% loss offset for the current year would simply result in a smaller figure being initially recognised as current tax, and would usually be shown as a reconciling item in the tax note. These receipts should not be shown as dividend income.Īn adjustment to reduce the tax payable balance as a result of a 100% loss offset for the prior year would be credited to tax expense, and would be included in the adjustment to current tax for prior periods shown in the tax note. Subvention receipts for 100% of the tax losses transferred should be recognised as income, and would generally be separately disclosed. For example: Net surplus before subvention Some entities prefer to shown subvention payments as a separate item after net surplus, but before tax expense. These payments should not be recognised in tax expense, and should not be shown as distributions to owners. Subvention payments for 100% of the tax losses transferred should be recognised as expenditure. It would not be necessary to recognise a tax liability and reverse it in the following year. Similarly, if an entity is expecting to receive tax losses by 100% loss offset to eliminate its taxable income, the current tax calculation could include the expected loss offset. However, where there is sufficient certainty regarding the transfer of tax losses, the financial statements may include adjustments for the expected tax loss transfer for the current year.įor example, if there is a group policy regarding the transfer of tax losses by 28% subvention payment, and other entities in the group have sufficient tax profits, an entity with tax losses could recognise a subvention receivable based on 28% of its tax losses. As a result, in many cases, the accounting adjustments for tax loss transfer arrangements will not be recognised until the following year. Accounting for these arrangements can depend on when decisions are made and how the tax losses are transferred.ĭecisions about whether or how to transfer tax losses for any particular year will often not made until several months after the financial statements for that year have been finalised. The accounting treatment of tax loss transfer arrangements is not specifically addressed in NZ IAS 12. A company can carry forward its tax losses instead of transferring the losses to another company. It is also reasonably common, particularly in wholly owned groups, to transfer tax losses by 100% loss offset and by 100% subvention payment. Using this combination, the amount paid equals the tax savings associated with the losses transferred. It is reasonably common for tax losses to be transferred by 28% subvention payment and 72% loss offset. A subvention payment is an actual payment for the gross amount of the tax losses transferred, whereas a loss offset is a transfer of tax losses for no payment. Tax losses can be transferred by loss offset election or subvention payment or a combination of these methods. Returns the value of a cell offset by a certain number of rows and columns from a given reference point.A company can transfer its tax losses to reduce the taxable income of another company in the group, provided that there is at least 66% commonality of ownership. If this occurs, the #REF! error will be returned. If OFFSET is used as an array formula, it is possible for the value returned by the array formula to overwrite part of the offset target, causing a circular reference. If offset_rows or offset_columns is negative, it is possible for the offset target to to be outside the upper or left edge of the spreadsheet. Width - The width of the range to return starting at the offset target. Height - The height of the range to return starting at the offset target. If a decimal value is provided, the decimal part will be truncated.
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