Regulation of accounting and tax evidence

Transcription

1 Regulation of accounting and tax evidence - no. 563/1991 Coll., the Act on Accounting - no. 586/1992 Coll., the Act on Income Taxes

2 The law on accounting defines: Acounting according to the International Accounting Standards, which are valid in European Community =the accounting in full scale. The law on income taxes defines: The tax evidence.

3 Accounting units Legal entities Individuals with the seat in the CR (entrepreneurs or entities who do not perform business activity) entities, who perform business activity in the territory of the CR Entrepreneurs turnover over CZK 25 million if they decided to keep the accounting voluntarily The others who are obliged to keep the accounting due to special law if they decided to keep the accounting voluntarily

4 Reasons for good bookkeeping: Good bookkeeping can protect you from an audit. Good bookkeeping protects you are audited. Good bookkeeping help you determine how successful your various ventures are. Good bookkeeping drastically reduces your stress level at tax-time.

5 Records for tax purposes (tax evidence) Revenues and expenses detailed as required Assets and liabilities.

6 Advantages of the tax evidence less bureaucracy compared with accounting, it covers especially requirements which are connected with income tax.

7 The tax evidence is kept: Only by individuals, who have: Income from business activity income from agricultural production, forestry and management of water-covered areas, income from a trade, income from other business activity according to statutory provisions (lawyer, auditors, doctors, vets ), Income from the other independent gainful activity income from copyright rights, income of artists, sportsmen, income of interpreters, experts

8 Primary receipts Real status Tax evidence Information for management Tax return Financial office

9 The essentials of accounting (tax) documents: labelling of tax document, object of taxable supply, identification of supplier and customer, the price (per unit and amount), date of the issue of the document, signature of competent person.

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13 Business property Long-term assets Short-term assets Intangible fixed assets Inventory Tangible fixed assets Receivables Financial property Financial investments Funds

14 Tax evidence of small business revenue and expense journal Other books: wage administration book of travels cash book sheets of long-term fixed assets sheets of inventory book of receivables and payables

15 The Revenue and Expense Journal (the minimum structure): date of realization of an accounting operation, labelling of a tax document, brief description of an operation, summary of total income which are the subject of income tax, summary of received and payable VAT, summary of total expenses included to the tax base, summary of income and expenses which are not subject of income tax, summary of income and expenses which increase and reduce the difference between income and expenses at the end of taxable period.

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18 Entries in the RE Journal (examples)

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20 The book of receivables and payables Receivables from commercial relations (invoices issued). Receivables from commercial contractual relationships (invoices received). Payables from received loans and credits (received bank credit)

21 Inventory There are most often kept in sheets or books of supplies! Determination of supplies: Materials up to the moment of the consumption, incomplete production, intermediate products from own production,products, young animals, Goods up to the moment of sale.

22 Provisions for reparation of long-term property, provisions on orchards and vineyards, other provisions under Law on Provisions.

23 Closing of tax evidence books on the last day of taxable period, on the day when the business activity is terminated,

24 statement of total of taxable income and expenses which are recorded in the Revenue and Expense Journal (detection of tax base), statement of unpaid receivables and payables, statement of assets in books (sheets).

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27 I E = TB TB x tax rate = income tax - TR

28 Business property Long-term assets Intangible fixed assets Tangible fixed assets Financial investments

29 Long-term intangible fixed assets: intangible results of research and development, software, valuable rights, and other assets which input price is higher than CZK 60,000 and its useful life is higher than one year.

30 Long-term tangible fixed assets: buildings, houses, and flats or non-residential premises, separate movable objects or set of movable objects which can only function together as an independent technical and economic unit, the input price of which is over CZK 40,000 and their operational and technical life expectancy exceeds one year, fields of perennial vegetation (orchards and vineyards) yielding a harvest for more than three years, adult livestock herds and draught animals.

31 Long-term financial assets: This asset is not depreciated. This group includes ownership interests and other long-term credit securities.

32 Depreciation of long-term tangible fixed assets No. 586/1992 Coll., Act on Income Taxes

33 Depreciation category Period of depreciation 1 3 years 2 5 years 3 10 years 4 20 years 5 30 years 6 50 years Tangible assets (examples) computers, TV cameras, office machines... horses for working, breeding or rearing, wire products (cables and belts), cooling and freezing equipment, automatic vending machines, tractors, motor vehicles (except motorbikes)... turbines, motors and metal structures, elevators, air conditioning equipment, trams, boilers... houses and buildings wooden and plastic, towers, industrial chimneys... bridges, highways, tunnels, swimming pools, roads, streets, waterworks... buildings of hotels, museums, department stores, libraries...

34 Depreciation methods of longterm tangible fixed assets the straight line depreciation the accelerated depreciation

35 The straight method of depreciation: Annual depreciation rate Depreciation category Period of depreciation First year of depreciation Subsequent years of depreciation For increased input price

36 Input price Annual depreciation rate for the first year of depreciation 1st year - IP x ADR 1 2nd year and subsequent years IP x ADR s Annual depreciation rate for subsequent years of depreciation

37 Example of straight method of depreciation (an ultra-sound machine) (input price = CZK 300,000) ,000 x 0.11 = CZK 33, ,000 x = CZK 66, ,000 x = CZK 66, ,000 x = CZK 66, ,000 x = CZK 66,750 total = CZK 300,000

38 The accelerated method of depreciation Coefficient for accelerated depreciation Depreciation Category Period of depreciation First year subsequent years for increased input price

39 Input price Coefficient for Accelerated Depreciation 1st year - IP / c 1 2nd year and subsequent years - (2 x RC) / (c s - n) Period of depreciation Residual value Coefficient for Accelerated Depreciation in subsequent years

40 Example of accelerated method of depreciation (an ultra-sound machine) (input price = CZK 300,000) ,000 : 5 = CZK 60, (240,000 x 2) : (6-1) = CZK 96, (144,000 x 2) : (6-2) = CZK 72, (72,000 x 2) : (6-3) = CZK48, (24,000 x 2) : (6-4) = CZK 24,000 Total = CZK 300,000

41 The example of calculation for increased residual value (personal motor car IP = CZK 300,000, modernization = CZK 50,000 in 2014) ,000 : 5 = CZK 60, (240,000 x 2) : (6-1) = CZK 96, (194,000 x 2) : 5 = CZK 77,600 + CZK 50, (116,400 x 2) : (5-1) = CZK 58, (58,200 x 2) : (5-2) = CZK 38, = CZK 19,400 Total = CZK 350,000