Construction Accounting Q&A Part 4 - Tax Treatment

Construction Accounting Q&A Part 4 - Tax Treatment
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Confused over contract accounting Q&A Part 4

Today we cover Q&A #4 on tax treatment as per IRB Public Ruling 4/2009 Construction Accounting.

These is normal part of our training note to our clients and new colleagues on contract accounting.

1 Determine date of commencement

* Date of letter of award
Or
* Date of actively carry construction work

2 Recognition of income

* Contract more than 1 year
* Contract completed in different accounting period

3 Separate source of income - Different contract different source.

4 Estimate loss on uncompleted contract - Allow to set off against estimated gross profit

5 Completion of contract

* Obtain certificate of practical completion
* Tax treatment of actual gross profit/loss

6 Others

* Unliquidated damage
* Warranty/defect liability expenses
* Guarantee fee

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