Differences Between Accounting And Tax Laws Of Cash Dividends

There is a controversy about whether there is any difference between the accounting cost and the basis of tax base in the acquisition of equity (stock). The focus of the controversy is whether the cash dividends that have been announced but not yet paid are included in the payment of the share price and the extra expenses of the enterprise.

For this problem, we first sort out the relevant policies in accordance with the provisions of the accounting. As for the accounting treatment of enterprise's purchase of equity (stock), we divide it into two situations: one is the implementation of the enterprise accounting standards, the other is the implementation of the accounting standards for small enterprises.

For enterprises executing the enterprise accounting standards, the shares (stock) purchased by them are generally classified into three categories according to the actual situation, that is, as long-term equity investment accounting, transaction financial assets accounting or accounting for the sale of financial assets. As a long-term equity investment, the company's purchase of shares shall be governed by the Enterprise Accounting Standard No. second - long-term equity investment. If the stocks purchased by an enterprise are counted as trading financial assets or available for sale financial assets, the accounting standards for Enterprises No. twenty-second - confirmation and measurement of financial instruments shall be implemented.

According to the relevant provisions of the accounting standards for Enterprises No. second - long-term equity investment, whether the investment enterprise is a long-term equity investment acquired in cash or in the form of equity securities, the price paid includes the cash dividends declared by the investment entity but not yet issued, or the profit not being taken as the cost of long-term equity investment, which should be treated as a receivable item.

According to the relevant provisions of the accounting standards for Enterprises No. twenty-second - confirmation and measurement of financial instruments, the cash dividends that have been declared but not yet paid by the enterprises in the price paid by the financial assets shall be treated separately as receivable items.

For the enterprises implementing the accounting standards for small enterprises, the shares (stock) they buy are either accounted for as short-term investments or accounted for as long-term equity investments. As a short-term investment accounting, according to the eighth provision of the accounting standards for small enterprises, the short-term investments paid in cash shall be measured according to the purchase price and the relevant taxes and fees as the cost. The cash dividends that have been declared but not yet paid in the actual payment price shall be separately recognized as dividends receivable and not included in the cost of short-term investments. As a long-term equity investment accounting, according to the twenty-third principles of accounting standards for small enterprises, the long-term equity investment acquired by paying cash should be measured according to the purchase price and related taxes and fees as the cost. The cash dividends that have been declared but not yet paid in the actual payment price shall be separately recognized as dividends receivable and not included in the cost of long-term equity investment.

Through the analysis of various related accounting policies, we can draw a conclusion that whether the enterprises that implement the enterprise accounting standards or the enterprises implementing the accounting standards for small enterprises, or whether the shares purchased by the enterprises are accounted for as long-term equity investments, or as financial assets or short-term investment accounting, the cash dividends that have been declared but not yet paid in the prices paid by the enterprises in accounting are treated as receivable items and are not included in the cost of the purchased assets.

As for the confirmation of the tax basis for the purchase of equity (stock), we need to implement it in accordance with the relevant provisions of the enterprise income tax law and its implementation regulations. According to the seventy-first provision of the regulations on the implementation of the enterprise income tax law: the investment assets are determined according to the following methods: (1) the investment assets acquired through payment of cash are at the cost of the purchase price; (two) the assets that are obtained through payment of cash are at the cost of the fair value of the asset and the related taxes and fees paid.

According to the provisions of this article, Enterprise income tax law "For the purchase of shares (stock), whether in cash or non cash, the historical cost is used as the measurement principle. However, in the tax law, if the stock (stock) contains the cash dividend declared but not yet paid, there should be no definite provision for the purchase of the equity (stock) link. If it is directly stated in accordance with the seventy-first provision of the regulations on the implementation of the enterprise income tax law, it appears that this part of the cash dividend which has been declared but not yet paid shall be the tax basis for acquiring the equity (stock) of the purchased enterprise. In this way, accounting and tax laws have made differences in handling cash dividends that have been announced but not yet paid.

Suppose: A enterprises bought 10000 shares of M company in January 2011 (as an accounting for sale of financial assets). In June 8, 2012, the M shareholders' meeting passed a resolution on dividend distribution, announces that 2 yuan cash dividend was issued per share, June 11th is the date of stock registration, June 12th is the ex dividend date, and June 18th is the cash dividend payment day. In June 10, 2012, the A company sold 10000 shares of M company's stock to B company at 15 yuan / share (regardless of the relevant taxes and fees).

According to the accounting standards for Enterprises No. twenty-second - confirmation and measurement of financial instruments, it is stipulated that the equity investment instruments available for sale are cash dividends It should be included in the current profits and losses when the dividends are declared by the invested unit (this policy is the same for the long-term equity investment calculated by the cost method and the enterprises implementing the accounting standards for small enterprises). In June 8, 2012, when A company announced the cash dividend announcement of M company, it needed to conduct a accounting treatment.

Borrowing: dividends payable 20000

Loan: the investment income is 20000.

In June 10, 2012, when B bought 10000 shares of M company, the payment price of 150000 contained 20000 yuan of cash dividends declared by M but not yet paid. According to the accounting standards, the accounting treatment of B company is:

Loans for sale: financial assets 130000

Dividends payable 20000

Credit: 150000 of bank deposits.

As a result, the cost of accounting for 10000 shares of B M shares is 13000 yuan.

For the 10000 shares acquired by B company Tax base According to the seventy-first provision of the regulations on the implementation of the enterprise income tax law: the investment assets acquired through payment of cash shall be purchased at the cost. Here, the tax base of these 10000 stocks is 13000 yuan or 15000 yuan. If you look at the seventy-first rule alone, it seems to be 15000 yuan. Therefore, many people believe that there are differences between accounting and tax law in the purchase of equity (stock) links.

However, if the system looks at the relevant provisions of the regulations on the implementation of the enterprise income tax law, it will be inappropriate to find such a view. According to the seventeenth provision of the regulations on the implementation of the enterprise income tax law, dividends, dividends and other equity investment income shall be recognized in accordance with the provisions of the decision made by the finance and tax department of the State Council in accordance with the date of decision made by the investor in making profits distribution. That is to say, for the confirmation of dividend income, the accounting and income tax laws are exactly the same. They must confirm the realization of income when the investor decides the profit distribution. Therefore, in June 8, 2012, A recognized both dividend income and dividend income on the corporate income tax. If the tax base for B enterprises to purchase these 10000 shares is confirmed by 130000 yuan, and 20000 yuan is recognized as Dividend Receivable, B company actually receives 20000 yuan. cash dividends When the receivables are withdrawn, no proceeds are recognized. However, if the tax base of the 10000 shares of B enterprises is recognized by 150000 yuan, there will be a big problem when the company actually receives the 20000 cash dividends. If the B company's cash dividend is confirmed, it will lead to the same income in two different companies. If the tax base of B company is reduced, there is no such provision in the relevant income tax.

Therefore, since the recognition time of cash dividends is identical with that in accounting, we can understand that when a company transfers the dividend (stock) that has been declared but has not yet paid cash dividends to another company, the company actually transfers two assets, one is equity (stock) and the other is Dividend Receivable. The purchase of a dividend (stock) company which has announced but has not yet paid cash dividends, is actually the two assets purchased at the same time after paying the price, one is equity (stock) and the other is Dividend Receivable. According to the fifty-sixth provision of the regulations on the implementation of the enterprise income tax law, the assets of an enterprise are based on historical cost. In this way, the tax base of the two assets purchased by B enterprises is 20000 yuan, and the tax base for the sale of financial assets is 13000 yuan.