Tax notes for financial reporting

Overview

The tax notes report utilises the data in TaxLab to prepare IFRS tax reporting notes in various formats. Each component of the disclosure is linked back to the specific trial balance or workpaper items that created the balance or adjustment. The tax notes report contains expected financial statement balances, a breakdown of the components of tax expense note, and a tax rate reconciliation note. All notes can be exported from the software to Excel.

Access tax notes

From the entity's tax year summary, in the navigation bar select Reports > Tax Notes. 

There are three tabs in the report:

• Tax Balances
• Major Components of Tax Expense
• Tax Rate Reconciliation

Tax Balances

The tax balances tab shows the balances that should be disclosed in the entity's financial statements, based on what has been entered into the software. The first section displays the tax balances in each financial statement (statement of comprehensive income, statement of financial position and statement of changes in equity). Below these are an additional number of disclosures including:

• Major components of tax expense
• Relationship between tax expense and accounting profit / (loss) and the effective tax rate
• Tax expense charged directly to equity
• Recognised and unrecognised deferred tax asset or liability
• Movement in deferred tax

Each amount can be selected, and will take you to another report (such as the deferred tax proof or tax account movements) containing details of the calculation. The Tax Balances report can be exported to Excel, using the Export button found at the end of the screen. 

Major Components of Tax Expense

The second tab in the Tax Notes report displays the major components of tax expense note, in the format required by NZ IAS 12.80.

Selecting the plus icon next to any line item will expand to display the components of the balance. Each component can then also be expanded, and amounts selected, which will take you to the journals tab of the workpaper that has created that tax adjustment.

Selecting the Expand all or Collapse all buttons at the top of the screen will expand or collapse all line items. Selecting the Export button exports the report to Excel.

Tax Rate Reconciliation

The third tab in Tax Notes is the tax rate reconciliation note, in the format required by NZ IAS 12.81(c)(d). 

Selecting the plus icon next to any line item will expand to display the components of the balance. Each component can then also be expanded, and amounts selected, which will take you to the journals tab of the workpaper that has created that tax adjustment.

Selecting the cog icon next to an expanded transaction allows you to change the disclosure category of a line item.

Narrations

Any of the line item narrations can be edited, and new ones added.

Add a new narration

1. On the Tax Notes > Tax Rate Reconciliation tab, select the Edit Adjustment Types button
2. Select the New Narration button. 
3. Type the new narration.
4. Select Save. 

Edit or delete a narration

1. On the Tax Notes > Tax Rate Reconciliation tab, select the Edit Adjustment Types button.
2. Select the Settings cog of the narration to edit, then select Edit. System generated narrations cannot be deleted.
3. Type the new narration OR select Delete.
4. Select Save. 

Related articles

Add or remove a workpaper

Deferred tax proof

Set up tax account movements