1. Accounting(Information for understanding the amount of revenue for the current year and the following years)
The ASBJ is proposing in the public draft of the “Accounting Standard for Revenue Recognition” to put footnotes on the “balance of contract assets and contract liabilities, and relating information” and “transaction prices allotted through residual performance obligations” as information to assist with understanding the amount of revenue for the current year and the following years. The ASBJ is addressing concerns from preparers about the burden of their new tasks. The ASBJ suggests discussing the necessity of these notes and is going to include these issues in the draft.
1)Contract assets and contract liabilities and related information
This shall note the contents if there are significant movements of balances of contract assets and contract liabilities. The draft suggests that quantitative information is not always required.
2)Transaction prices allotted through residual performance obligations
Regarding the transaction prices allotted through residual performance obligations, the standard will allow companies to exclude partial performance obligations from their footnotes if the contract’s initial estimated term does not exceed one year.
The new criteria of footnotes will let companies update their systems, thus each company will need to deal with it earlier.
2. Tax
The Liberal Democratic Party Tax Study Committee reviewed the main issues on November 27 prior to compiling the tax reform outline for 2020. This includes extension measures for the period for correction / decision making when exchange of information is made with foreign tax authorities. Specifically, if the taxpayer has not submitted the necessary information for the payment of tax by the specified deadline, and when the tax amount is found to be paid as a result of the exchange of information request with the foreign tax authorities, the tax office superintendent will be able to execute corrections and decisions for three years from the time of the request, regardless of the ordinary correction period. The outline of the tax reform for 2020 has not been announced yet, so the detailed report will be updated following the announcement.
3. Labor Management (Non-taxable measures of Inhabitant Tax for Single-Parents)
To address child poverty, the Japanese government has established a measure to treat inhabitant taxes as non-taxable from single-parents receiving child-rearing allowance if their annual taxable income of the previous year is 1,350,000 JPY or less. This non-taxable measure will come into effect from the inhabitant tax in fiscal year 2021.
With this change, the “For 2020 Application for (change in) exemption for dependents of employment income earners” form was revised to include a new section for single-parents.
This non-taxable measure is for inhabitant tax (Individual) purposes only, and does not affect individual income tax.
“Single-parent” refers to an individual who falls under all of the following:
1) An individual who is a mother or father of a child subject to child-rearing allowance.
2) An individual who is not married (including common-law marriage relationship) or whose spouse (including common-law marriage partner) is missing.
3) Total annual taxable income of the child subject to child-rearing allowance is 480,000 JPY or less.
(Resource: Japan Pension Service, Pension Q & A – “Q. What is child-rearing allowance?”)
4. This Month’s Words of Wisdom
This Week’s Words of Wisdom is not appearing in this issue.
For more details, please refer to Nagamine & Mishima JC Accounting K.K.
