1. Accounting(Clarifications to Revenue Recognition Standard)
In April 2016, the IASB issued amendments to IFRS 15, Revenue from Contracts with Customers. The amendments do not change the underlying principles of the Standard but rather clarify how the principles should be applied. The amendments clarify the following:
(1)how to identify a performance obligation in a contract. (the promise to transfer goods or services to a customer).
(2)how to determine whether a company is a principal. (the provider of goods or services) or an agent (responsible for arranging for the goods or services to be provided).
(3)how to determine whether the revenue from granting a license should be recognized at a point in time or over time.
In addition the amendments also include additional transitional relief provisions aimed at reducing the cost and complexity for entities when they first apply the new Standard. The amendments are effective for annual reporting periods beginning on or after January 1, 2018.
2. Tax
The 2016 tax reform clarifies the tax deductibility of services by a director, employees or other individual (hereinafter directors etc.) when a domestic corporation in return grants them qualifying restricted stock in itself or a parent company of which it is a 100% wholly owned subsidiary. The qualifying restricted stock must satisfy the following three requirements.
(1)Transfer of the stock that directors etc. is awarded for their services is subject to some restrictions.
(2)There is a period for the restriction of the transfer.
(3)Conditions are specified under which the directors etc. forfeit the stock by a domestic corporation.
A domestic corporation can claim tax deductions on services by directors etc. in relation to the granting of restricted stock. The timing of the deduction is the fiscal year when the restriction of the transfer is lifted. Where the qualifying restricted stock is awarded to a director, upon meeting certain requirements, a domestic company can take a deduction for the restricted stock as a fixed compensation notified in advance without filing an advance notice.
3. Labor Management(Amendment to Employment Insurance Act)
The Amendment to the Employment Insurance Act, Etc. (the “Amendment”) was enacted on March 29, 2016. The following changes will come into effect on January 1, 2017.In order to promote the employment of the elderly, Employment Insurance coverage will be expanded to workers who are newly hired after reaching the age of 65 (the obligation to pay this insurance premium does not begin until 2019).Regarding childcare leave, the scope of children who are covered by childcare leave will be expanded, and the application requirements for fixed-term workers will be relaxed.
To prevent workers from leaving jobs for family care, the measures to shorten normal working hours will be amended and a new system will be established which exempts workers from overtime work. In addition, workers will be allowed to take family care leave in installments.
To encourage workers to balance their career and childcare/family care, workers will be able to take childcare/family care leave in half-day increments, and employers will be required to take the necessary employment management measures to prevent superiors or colleagues from disturbing the working environment of a worker due to the worker’s pregnancy/, childbirth, or the worker taking childcare/family care leave.(Source: Ministry of Health, Labor and Welfare website)
4. This Week’s Words of Wisdom
“The greater part of our happiness or misery depends on our dispositions and not on our circumstances.”(Martha Washington, The first lady of the first president of the United States of America)
It’s only after you get sick or injured you realize how important your health is in your life. Being in shape mentally and physically will help you be positive with anything you are working on.
The referring page is Nagamine & Mishima JC Accounting K.K.
