Month / February 2007

by Edgar

Balancing your accounts.

P/S Orchard Turn under construction.
1% reduction in corporate tax rate would cost $400mio a year.
1% increase in GST is expected to raise $750mio.

An 8% decline in compulsory road tax is to compensate you 50cts ERP increase in toll rate, more tolls to be operational and higher carpark charges. [I still lose. For a 2-litre car, 8% is about $120 per annum. $120 is meaningless. Btw, my car is only 1.6 litre.]

A 1.5% increase in employer’s CPF is cushioned by a 2% cut in corporate tax rate and an increase in the partial exemption threshold from $100,000 to $300,000.

A 2% increase in GST is compensated by a comprehensive offset package to citizens with no change to personal income tax. [I still lose as I won’t be able to get a single cent of the offset package.]

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by Edgar

Borrowing costs other than interest

There are many other costs associated with the act of borrowing other than interest costs. Example of such costs could be professional fees, arrangement fees, statutory fees etc.

While such costs may be considered capital expenditures, these costs are currently not tax deductible.

Recent budget annoucement has indicated a willingness to reconsider this area. Look out for more details from May 2007.

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by Edgar

Yen Hoon says …

Hi,

I thought that I didn’t do well for paper 1.1 as I did last minute revision. I was expecting to retake the paper or at most get only 60 marks.

Instead, I got 87. Really happy about the result.

I’m now doing regular studies for my papers 1.3 and 2.1.

Thank you, Edgar, for being a wonderful and dedicated teacher.

Yen Hoon

P/S – Congrats to Yen Hoon. Edgar

by Edgar

Annie says …

Dear Edgar,

The December 2006 Exams results are out today and I want to thank you for your patience and self-less devotion in lecturing us.

You are an outstanding lecturer who delivers lessons in a unique way. Thank you for your many times of ‘nagging’ (repeated) so that the concepts are driven to my head without much effort.

You are already a successful lecturer and I know you will enjoy more successes in future.

P/S Annie secured 85 marks for P1.1.

by Edgar

Tan K.T says …

Hi Edgar and Mr Goh,

Thanks for all your guidance in my paper 1.1.

I am quite delighted with the result i have achieved for your paper 1.1
I have obtain a score of 78 marks for this paper 1.1. Although it is still a bit below my target score (80 marks), at least i pass the paper.

Finally can relax now and can enjoy my Chinese New Year before going all out for the other papers (especially Paper 2.3 under Mr Goh) Hahaha. =)

And by the way, Mr Goh, please forgive me of all those broken english (or maybe not even english language) i have use in this email. Just treat like what you always mention in the sunday class, listening to the uncle’s conversation at the coffeeshop.

By the way, i like to wish you a happy Chinese New Year and have a prosperous new year ahead.

Gong Xi Fa Cai.

Once again thanks for all the effort you have made in order for me to pass this paper.

Regards,

Tan K. T.

by Edgar

Making Accounting Cool

Need to up the profile of accountants.

Why? General increase in demand for accountancy services due to:-

  • increasing regulation
  • hot economy
  • record levels of M&A
  • adoption of international accounting standards

In Australia, there is only one accountant for every 4 job openings.

How to raise the x-factor in accountancy for the supply?
Besides the standards thrills and frills of bigger pay packages, signing on bonuses, etc etc etc,

  • Hong Kong Institute of Certified Public Accountants (HKICPA), through its office in Beijing, will help to train 1,500 mainland accountants over 10 years.
  • The most interesting idea of all – Institute of Chartered Accountancy of India (ICAI) want to add the prefix “CA” (ie. Chartered Accountant) to the names of all licensed CPAs ie. as per “Dr” for doctors.

So signing off now at 1.45am, CA Edgar Wong 🙂

Reference – Feb 2007, “Making Accounting Cool”, CFO Asia.

by Edgar

Incentives for Overseas Investment

Why the need for Singapore companies to invest overseas?
In a very simple manner, to make more monies from a bigger market size.

There was a rallying call from the government under Goh’s administration for Singapore companies to go overseas. I was working for one such company who took up that challenge.

We were overcame by lack of attitude preparation to operate in a foreign market and finally succumbed to the financial crisis in the late 1990s.

Recently, Mr David Sandison in his article in BT’s “Tax alone cannot solve everything” raised the issue on overseas investment again. He said Singaporeans still need a push to get them out and about in the world, to take their businesses across borders and leave a footprint in the global sands.

Currently, incentives to venture abroad are virtually non-existent, and even less used, as they reward only failure through deductions for losses.

The interpretation of our tax schemes may be harsh. They were crafted to anticipate losses from early days of any investment.

Perhaps it is timely now to heed Mr Sandison’s call to change the approach.

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by Edgar

Denise Ang and her Gaelic victim

The festive spirit is among us.

Remember the case of Gaelic Inns of Muddy Murphy’s Irish Pub and Penny Black vs Patrick Lee Public Accounting Corp for $1mio of negligence.

Judge Belinda Ang had found the auditors guilty of negligence for not alerting management earlier of possible discrepancy in the cash balances of up to $672,253. $775,000 was awarded.

In yesterday’s ST, Judge Ang explained her judgement. She said directors cannot “siam” or abdicate their duties by engaging experts and reasonably competent employees.

Duties such as asking for and analysing bank reconciliation statements. The managment has to take some level of responsibilities for contributing to the negligence.

Patrick Lee PAC is appealing.

by Edgar

Let’s talk about sex in the Boardrooms!

Humans compressed over 2 streets.
“No no,” my friends. I want to say, “Let’s talk about TAX in the boardrooms.”
Recently a student asked me some questions on how to apply GST on the transactions that she has to invoice.
Not sure where she is in her company’s management hierarchy. The fact that she is asking questions should be a comforting plus to her boss. Incorrect GST application not only invite unnecessary attention from the authority but may incur financial loss in the form of fines, penalty and manhours to remedy. A 5%-mistake (and soon a 7%) will really eat into your margin. Customer goodwill may be eroded too.

The directors of a computer gaming developer startup were grilling me on the tax implications of some corporate moves that they are considering.

In the past, tax matters were considered private, too technical for the laymen – it was something the tax department or someone from the auditor’s office dealt with, with the tax authorities.
What is the price of not talking about tax in the boardroom?
  • Without good tax management, you will not be considered a good boy ie. a company with good corporate governance; and
  • You will not have the strength & depth to venture overseas and hold yourself up to the sometimes different standards in other jurisdictions.

If you don’t about tax in the boardroom, what do you guys actually talk about? [wink.. wink..]

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by Edgar

A definition of Accountant

Hi friends – Share with you the sentiment of this reader who wrote to me.

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Hi Edgar,

Share my thoughts with you. A practical accountant in a harsh business climate is very different from a academic accountant. I am very shocked to learn what is meant by a real life accountant from my own exposure. This is also confirmed by your article on the Auston’s case.

Their life is definitely not easy. I am beginning to re-define an accountant’s job. Now, I know that running a business and being an accountant is no difference. Think about this point and you will know that their stress level is no joke.

RP