Clients and accountants must collect the information to complete the affidavit without inconsistencies.
At this time of the year, the taxpayer should begin gathering the information that accountants need to make affidavits (DDJJs) of income and personal property. On some occasions, the information is insufficient or when entering this information into the forms, some inconsistencies may occur.
How DDJJ is done e what are the disadvantages and the more usual differences that arise and give rise to controversies and differences between taxpayer and accountant?
What information is needed
In the case of a human person who is in a dependent relationship, the corresponding income tax to pay the employer retains it month by month and is liquidated to AFIP. The only possible obligation is submit the DDJJ information if it exceeds the amount determined annually by the collection agency.
In case of exercise of the profession independently (fourth category) or exercise a commercial activity / industry (third category) as a sole proprietorship, you must submit the annual DDJJ a determine the tax to be entered.
People do not keep accounts (they can, but most do not) and have minimal information about the business they do – purchase invoices received and sales invoices made.
With this information, in addition to the balances of bank accounts, purchases and sales of vehicles, real estate, movable assets, shares and securities and the balance of loans and / or liabilities, the DDJJ is carried out.
How information is uploaded
The information does not come from a balance of equity and income account balances, as is the case when there is intermediate accounting (line items, ledgers, and balances). The DDJJ contains items or cargo items:
- Schedule of assets and debts
- Income statement
- Balance sheet changes
The Schedule of assets and debts It comes from the information in the Assets (assets) and Liabilities (debts) accounts we have. AFIP has some of this information and makes it available through the “Parte Nostra” web service (balances of bank accounts).
The Income statement includes the sales, purchases and expenses that have been made and the AFIP also has that information and is in the “My receipts” service.where we have the details of the vouchers issued and those received.
Finally the Balance sheet changes It is the one that “balances” the equity part and the part of the results and allows adjustments and offsets to be made.
Affidavit scheme
- Activity on opening / closing
- Debts at the beginning / closing
- Fairness at the beginning / at the end
- Result for the year
How the affidavit works
The Affidavit operates through the principle of “equity difference”. The assets and payables at the beginning of the period are compared with those at the end of the period.
The difference is the result (gain or loss).
Instead, we have sales (invoices issued) minus purchases and expenses (invoices received) which also determine the result of the period.
The result of the difference in equity must “match” the result of the difference between sales and purchases.
Increase in equity:
- Gain (target)
- Consumed (personal expenses)
The consumer emerges by difference in the DDJJ in the table of variations
What is the consumed
The amount consumed (personal expenses) is the part of the period result (profit) that was allocated to personal expenses and which cannot be deducted as expenses, since they are not related to the taxed activity.
These are all expenses that include, for instance, food, clothing, trips, travel, transport, service costs (gas, electricity, telephone) and all real estate and car costs not affected by the activity.
There is no “type / model or reasonable” consumer value, it exists consumed according to the standard of living of the taxpayer.
AFIP shows part of the information that makes up the consumer in “Our part”, such as debit and credit card charges. Other information, such as private tuition, boat nursery rentals, bank credits, and more, are not available to taxpayers, but AFIP does.
What happens if the consumer is negative?
If the consumer gives negative, it is because something is incorrect.
An alternative is that income has been omitted (so the result and consumption should be higher).
Since the result arises from the difference in equity, the other alternatives go through a product of “capital imbalance” of not considering certain situations or certain transactions.
It makes sense since the DDJJ is not born out of an accounting system, but rather is a “construction” with equity balances and sales and purchase receipts.
Imbalances (plus or minus) are corrected or compensated for in the Table of Variations, the purpose of which is precisely that.
A few examples:
- exchange differences: the foreign currency has been accounted for at one value and is used when it is sold at another value. That difference, which is the difference of exchange, must be reflected.
- Active that were at the beginning and not at the close (donations granted, trust assets)
- Activities that were at the close and not at the beginning (donations received)
- Income from the sale of goods such as buildings or vehicles.
- Other income not considered through the invoices issued.
- Result of sale of securities or shares.
- Results that neither generate nor consume funds. If we consider the rental value of a property as an income, although it is a profit, it did not generate money and, if we consider the depreciation of the assets affected by the activity which are losses, they did not consume money, which is why both situations must be adjusted so as not to generate an error in the quantity consumed.
In short, it is more complex to carry out a DDJJ of a person than of a company (in general terms and speaking of SMEs)
It requires a lot of attention because you have to contemplate operations and situations that they do not derive from purchase and sale invoices and balance sheet balances and that you have to “trace”sometimes just from the analysis and other times asking the customer and investigate operations and situations that do not derive from the elements available to us.
Daniele Punto
Source: Clarin