Australia John Hindmarsh Pty Ltd. Shanghai Representative Office
Notes to Fund Expenditure Statement
For the Year 2007
I. General information
Australia John Hindmarsh Pty Ltd. Shanghai Representative Office obtained the Registration Certificate of Resident Office of Foreign (Regional) Enterprise (QWHZZ No. 15052 (Municipal Bureau)) from the State Administration for Industry and Commerce of the People’s Republic of China. The Representative Office is engaged in real estate investment and development and construction materials and wine trading. The period of residence is from May 23, 2005 to May 22, 2008.
II. Significant accounting policy
Foreign currency translation: Transactions denominated in foreign currency of the current period is converted into RMB at the forex rate stipulated by the People’s Bank of China prevailing at the date of transaction.
The Representative Office calculates its income and taxable income using fund expenditure-plus method. Based on the total fund expenditure of the current period, the income is calculated to be RMB 1,762,100.91 Yuan.
The calculation formula is as follows:
Income = Total fund expenditure 1,497,785.77 / [1- Appraised profit rate (10%) – business tax rate (5%)]
- Total fund expenditure includes salaries of foreign personnel for their working period in China and individual income tax
- Business tax
Business tax is collected at 5% of income, and the total business tax payable for the current period is 88,105.04 Yuan. Business tax in an amount of 88,105.04 Yuan has been paid up as of January 15, 2008.
- Corporate income tax
The Representative office calculates taxable income at 10% of total income. Taxable income of the current period is 176,210.09 Yuan. Income tax of foreign-invested enterprise (30%) and local income tax (3 %) add up to 58,149.33 Yuan. As of January 15, 2008, income tax in an amount of 58,149.33 Yuan has been paid up.
- River project construction and maintenance fee
Calculated at 0.5% of business tax, the river project construction and maintenance fee payable for the year 2007 totals 359.09440.52 Yuan. As of January 15, 2007, river project construction and maintenance fee payable for the year 2007 in an amount of 440.52 Yuan has been paid up.
- Withholding individual income tax
The salary income of ordinary representatives obtained from overseas totals 460,003.65 Yuan and the individual income tax payable accounts to 99,481.11 Yuan. Since September 2007, ordinary representatives have turned into chief representative, whose salary income obtained from overseas totals 183,833.90 Yuan and individual income tax payable amounts to 40,705.17 Yuan; the salary of employees totals 52,000.00 Yuan and the individual income tax payable amounts to 3,430.00 Yuan. As of January 10, 2008, the Representative Office has withheld individual income tax payable by chief representatives and ordinary representatives in an amount of 140,186.28 Yuan and Shanghai Foreign Service Co., Ltd. has withheld individual income tax payable by employees in an amount of 3,430.00 Yuan, which amount to 143,616.28 Yuan.