Exposure Draft on Deferred Tax

Current practice
Companies must state if they intend to rent out or sell the property in future. Appropriate taxes are then applied ie. 17% deferred tax on rental income or 0% on capital gains from disposal of properties.

Proposed change
The respective country’s capital gains tax would be applied to all properties.

Assessed impacts

  • Since Singapore has no capital gains tax, past and future deferred tax provision would not be necessary before the end of 2010. 
  • Net asset values of property firms could go up by 5 to 8% as per Mr Choo Eng Beng, PwC. Share price of property firms could subsequently go up too due to higher valuation.

Can I have a Partnership with one Partner?

Dear friends,

Consider ths situation.

You started a partnership with a friend and you named it “Ah Kow & Partners”. For some reasons, your friend decided to leave the partnership and you continue to run the “partnership” singularly and without a change in business name. Is this acceptable by law?

The Court of Appeal ruled as follows in Orix Capital vs Chor Pee and Partners:-
a) Requested the Law Society to be more transparent about law firms and partners operating which each firm given existing rules within legal profession forbid firms from using names that are misleading and;
b) Chor Pee and Partners was found to be not liable for the debt of $263,000 to Orix Capital as the contract was deemed to have been signed by an individual ie. Lim Chor Pee and NOT by the partnership.

I am wondering why registration of law firms is not under the jurisdiction of ACRA ie. just like any other business entities in Singapore. Please note that the above could be peculiar ony to law firms and not those partnerships under the ambit of ACRA. (I am speculating here. Can someone correct me if I am wrong.)

Bottomline – You cannot have a partnership of one person. But who should make sure this happen?

ACCA Conference 2010 – Cheong Pui Yuen

Pui Yuen’s mentor

Mr Cheong Pui Yuen presented an interesting and honest paper entitled “Transforming the Public Accounting Profession – A Practitioner’s Perspective”.

He attempted to outline some ideas of how we (as an auditng entity, as a member of the public accountants, as customers/clients to audit firms and as accountancy body like ACCA) can respond to the impending changes as highlighted in the CDAS report.

As an auditing entity, you may to seriously think about the following:-
a) expanding scope of services offered;
b) consider gaining scale by working together in local and regional markets
c) explore increasing its capital base given the relax rules governing ownership
d) scenario planning with different audit exemption threshold ie. what if the threshold is increased current $5m to $10m etc
e) scenario planning with increased costs from higher quality expectation (and possibly with limited price increase)

As for customers/clients of auditing entities, Mr Cheong advised as follows:-
a) expect higher service quality;
b) pay a fair fees for service rendered;
c) don’t encourage fees cutting;
d) work with progressive/quality audit entities;
e) and lastly and very checkily he said, “pls don’t take away our resources unnecessarily”.

For accountancy bodies like ACCA, he opined that it should continue to step up its profile, collaborate with other entities from government, trade, other accountancy bodies etc etc. He stressed that it is very important for ACCA to differentiate itself so as to give a reason for its members to continue renewal of their membership.

ACCA Conference 2010 – Tim Hird, Robert Half International

Dear friends,

Tim Hird presented his findings of a joint ACCA/Robert Half research entitled “Talent and Skills in Finance & Accounting Survey 2010 – Uncovering the Challenges”.

May I highlight some of his main points:-

Skills that are lacking in finance & accounts related staff are:-
a) management and leadership skills;
b) interpersonal skills / ability to work within a team and;
c) communications skills.

For employers, the top three retention strategies for staff are:-
a) improve salary package;
b) offer promotion or better career development and;
c) offer flexible hours / work from home.

I understand that the full report will be released by end of month.

Burger King vs Sinar Mas/Golden Agri over green issues

In today’s Sunday Times, I read that Burger King cancelled its contract to buy palm oil from Sinar Mas Agro Resources and Technology (SMART). This is said to be a move to protest over Sinar Mas not adopting sustainable farming practices and destroying rainforests in generating the palm oil.

This is a timely reminder of the importance of “Green Reporting”/sustaintability reporting and SGX’s recent issuance of guidelines (ie. non manadatory) on disclosure of social and environmental aspects of business.

Boards and management of companies are slowly and surely being made accountable to all stakeholders. Many years ago, they were said to be only responsible to shareholders for financial results. Now given emphasis on sustainable reporting, management are now being queried on how they achieve those results and the impact they have on the communities within which they operate in.

While I personally hope for such information to be made available on a statutory basis, I am however happy that SGX has taken the first move to “encourage” such reporting.

Bursa Malaysia is ahead of SGX when it legislated (ie. by law) that such reports be made compulsory back in 2007!!! According to ACCA survey as reported by Darryl Wee, CEO of ACCA Singapore, 49 companies in Malaysia generated sustainability reports in eight years. In comparison, Singapore lagged behind with only 21 companies.

P/S – SMART operates all palm oil plantations for Golden Agri Resources, a company listed in Singapore Exchange.