Loss Carry Back System

What was then?
Companies can either carry forward their unutilised capital allowances (CAs) and trade losses to offset future incomes (i.e. loss carry-forward) or transfer these unutilised CAs and trade losses to offset profit in related companies as part of group relief.

What was wrong?
These schemes may not provide adequate or timely support to smaller businesses that run into cash flow problems, particularly during a cyclical downturn.

What is the solution?
Starting YA 2006, a one-year carry-back of current year unutilised CAs and trade losses will be introduced.

The main features of the scheme are:

a) Only current year unutilised CAs and trade losses will be allowed to be carried back for one YA immediately preceding the YA in which the CAs were granted or the trade losses incurred.

b) Up to $100,000 of current year unutilised CAs and trade losses can be carried back.

c) The carry-back system will be available to all businesses, including sole proprietors and partnerships.

d) The current requirements for carry-forward of unutilised CAs and trade losses will similarly apply when these amounts are carried back i.e. no substantial change in shareholding and nature of business.

A blanket exemption for estate duty?

To minimise estate duty – invest in residential real estate given the exemption granted for value up to $9mio – was the advice given in last week’s article.

This is a heavy weightage on property as an asset class. Why? To encourage home ownership? To encourage you to stay in Singapore or to discourage you from leaving? To hold up property prices? Don’t think so.

Tan Peng Boon, in today’s Sunday Times, suggested a blanket exemption of up to $9.6mio in term of all assets instead of the current sublimits applied on residential properties and other assets.

Perhaps this is a convenient compromise for the government to hold on to this tax for a few more years.

Oxford Brookes Degree

P/S – A sad memory.


Oxford Brookes has revised its degree programme to incorporate ACCA syllabus changes. Here are the snippets that I wish to share with you.

The revised scheme will apply from Aug 2008.

While you still have to complete F1 to F9, but only marks for F4 to F9 will count towards which qualification you will get ie. first class honours, second upper etc. Why? F1, F2 and F3 have been light-weighted to 2 hours of MCQs.

The quality of Research and Analysis Project (RAP) will also go towards qualification. It can ONLY upgrade you from one class to another. To illustrate, if your average mark for F4 to F9 qualifies you for second upper and you did such a wonderful RAP, Oxford Brookes may “bump” you up to first class honours.

By the way, I was told that you would have to submit a RAP of 6,500 words from Aug 2008 (currently 5,000 words). This is to partially compensate for the lower loads of F1 – F3.

For more detailed info, you know where to go right?

Till death do your money part as taxes?

Insurance proceeds, as you probably know, are NOT automatically exempt from death duty.

While there is an exemption threshold for residential property of up to $9 million, any payouts from mortgage protection plans taken up on the properties will be taxed should the mortgagor or borrower and policy owner die.

I didn’t know that until I read today’s BT on “Of Death and Taxes“.

I bought the standard MDTA ie. mortgage decreasing term assurance to cover my property loan exposure. The plan’s death benefit would go to pay down any outstanding home loan. But didn’t know it would be taxable.

So what are the possible solutions?
All the solutions except for (d) essentially try to play with this specific rule:-

“The exemption threshold for financial assets is $600,000.
Insurance policies structured as trust policies under Section 73 of the Convenyancing and Law of Property Act are automatically exempt BUT each policy will be subject to the $600,000 threshold.”

Briefly they are:-
a) Enter into a “cross life” arrangement ie. you buy for me and I buy for you.
b) Assign the policy to the mortgagee bank.
c) Take a joint life policy.
d) Set up a trust. (Not advisable.)

So much for now.

QAF and S44A

P/S – Singapore River on Sunday last.

QAF, the company best known for Gardenia bread, told its shareholders that they will receive 973 PSC shares and 284 Zhongguo Jilong shares as dividends for every 1,000 QAF shares held.

Advantages to shareholders
– Allow them to seek tax credits if the corporate tax is higher than personal income tax rate.
– Shareholders have the flexibility to sell the new shares received for cash.

Advantages to QAF
– goodwill with its shareholders
– no impact on its cashflow

Stock valuation – Weighted Average Pricing

P/S – My Sunday walk along Boat Quay today…

Hi class,

There are 2 general types of weighted average pricing ie.

a) Cumulative weighted average pricing
b) Periodic weighted average pricing

a) Cumulative weighted average pricing
– The average price is determined by dividing total cost by the total number of units.
– A new weighted average price is calculated everytime upon arrival of a new batch of materials into store – key feature

b) Periodic weighted average pricing
– For a certain period, a RETROSPECTIVE average price is calculated for all materials issued during the period.
– The issue price can only be determined upon closure of a certain period.
– How to calculate?

Opening stock value + Cost of all receipts within period
Opening stock in units + All receipts in units

ACCA2007 Exemption policy announced

There is now a standard and transparent set of policy guidelines for those seeking exemption as they initiate their pursuance of ACCA qualification

Here they are:-

Type of degree (ACCA exemption)
– Accounting degree – major (F1 – F4 )
– Accounting degree – joint/minor (F1 – F3)
– Finance degree (F1 – F3)
– General business / management degree (F1)
– Law degree (F4)
– MBA (F1 – F3)
– Non-relevant degree (no exemption)

LLP for small businesses


Saw this signboard at a hawker stall.

It reflects the increasing sophistication of people operating even small businesses.

Are you familiar with this form business registration to take advantage of it? For those uninitiated, LLP is limited liability partnership.

Send me a pic of anything interesting relating to the topic of accounting.


P/S – Will try the food this weekend.

Companies in China have 2 sets of accounts?

P/S – Jalan Besar Stadium

Yes, it is official now.

What happened?
Mainland-listed companies will have to prepare two sets of annual reports for this year after new accounting standards come into effect on Jan 1.

Shanghai and Shenzhen-listed companies will have to publish their 2006 annual reports as before, using the current accounting standards, but will also have to publish an additional report where their results are calculated according to the new international standards.

What are the implications?
According to Haitong Securities analyst Zhang Qi – ‘Many companies used the old accounting system as a form of window dressing to make themselves look profitable when in fact they were not.’

Will this lead to a severe correction of Chinese stock markets if this has still not been factored into the pricing by now?

Initial public offerings (IPOs) or secondary offerings must also use the new accounting standards starting Jan 1, according to new regulations issued last week by the China Securities Regulatory Commission. Last three years’ profit is a prerequisite for listing in China.

Will this therefore reduce the queue for IPOs in China and thus reduce demand for listing in foreign bourses eg. Singapore?

For those who will not make the cut, will they go back door listing?

Local companies are exempted from the rule for now.

If the government want to see a change in this area, it should take the lead by asking all its state-owned enterprises to make that change asap.

Reference – Dec 5, 2006, “New accounting rules affect China firms’ profits”, BT/SCMP.

CCDG out. ASB in.

Minister of State for Finance, Mdm Lim Hwee Hua said that Accounting Standards Board (ASB) will replace the Council on Corporate Disclosure and Governance (CCDG).

Effective Sept 1, 2007.

It will comprise key regulators, senior accounting professionals, and leading users of financial information.

Why the change?
Except for expanded responsibilities of issuing standards to cover entities such as charities, societies and co-operatives, I wonder why the need to change the name when essentially almost everything else remains unchanged.

Probably the name change is just that ie. to signify the addition of responsibilities.

Good night…