13th July 2017

                                                  Lee, Eun Jin CTA.

 

Ⅰ. Proof of expense

 1. Thereason to prove expense.
  - It is expense to expender but incometo the other party.

  - Proof of expensesis regulated strictly because it is related to income to the other party.

  - The proof isrequested to both side

    →regulated proof.

 2. Regular receipt

  - tax receipt,normal receipt, cash receipt, company credit card, credit card under the nameof the executive, debit card.

 3. Irregular receipt

  - Simplicity receipt

  - If the amount with value added tax is over30,000 2% additional tax from dealing amount will be charged. (If there is notany special case please get the regular receipt).

  - Although it isnot regular receipt if there is proof for the expense as remittance breakdown,it can be acknowledged as expense.

 

Ⅱ. Notice for the expense with credit card.

 1. Credit card underthe name of executive.

 (1) If the cost is spentwith credit card under the name of executive, it can not be as expense even itis used for company work.

 (2) Possible itemfor the expense : cost of maintenance for cars, supplies expense, payment commissionetc.

 (3) Expense used inholiday, weekend is necessary to be recorded clearly.

 (4) Personal cardshould be designated by using car and be distinguished with household creditcard.

 (5) Dealing method :Charge after using one month or some period ( 15 days ), make a remittance topersonal bank account.

2. Notice for using company card.

(1) Company card can be used for every expense

 1) There are limitedin entertainment expenses

 2) General expense(employee benefit, supplies expense, payment commission etc) can be deducted10% from the paid amount by credit card as VAT input tax.

 3) Entertainmentexpense or expense for compact car for non business use(parking fee, oil,repair cost) are not deducted as VAT input tax.

(2) Personal expense in household can not be expense inaccount.  (*) notice for article : supplyfor household (clothes, household item etc.)

(3) Expense used near house

Whenemployee use expense near house should be careful not to be regarded ashousehold expense.

(4) When employee use company card during weekend thebreakdown should be clear.

(5) Expense during the vacation should be proved asbusiness related expense.

(6) Golf expense

 1) if golf expenseis proved for business it can be entertainment expense or employee benefit.  

 2) Using facility inthe company event can be employee benefit.

(3) The other expense except above (1), (2) is regarded aspersonal expense. (if it is regarded as personal expense income tax can becharged.)

 

Ⅲ Expense by accounting title

 1. Employee benefit

  (1) It is theexpense for employee welfare benefits.

  (2) 20% from salary is proper. (meal, car,dine, employee family event).

  (3) Above expensecan be deducted in VAT input tax.

 2. Entertainmentexpense

   Entertainmentexpense is paid money for customer and there is limit.

 →Entertainment expense limit = ①+②

  ① Generalentertainment expense limit = ⒜+⒝

⒜ basic amount : small business : KRW 18,000,000

   Others KRW 12,000,000.

⒝ limit income: (general income x application rate) + (affiliateperson income x application rate )

(application rate) 1) 0~10,000 million : 0.2%

               2) over 10,000 million ~ 50,000 million : 0.1%

               3)over 50,000 million ~  : 0.03 %

②Cultural entertainment expenses limit = MIN (⒜,⒝)

⒜ Expenditurefor cultural entertainment expense.

⒝ General entertainmentexpenses limit (=above ①)x10 %

(3) Value added tax related to entertainment expenses cannot be deducted in VAT input tax.

(4) Entertainment expenses should be paid by company card tobe regarded as loss and expense. (within limitation)

(5) Expense for client event.

Within 200,000 can be regarded as entertainment expense

Without documentary evidence. (over200,000 can not be

regarded as entertainment expense.)

3. Maintenance expense for car.

It is the expense employee buy, maintain for car forbusiness.

The amount within limitation can be recognized as expense.

(1) For business.

Visiting customer, promotion event, participating, meeting,

commuting etc.

(2) Expense related to cars for business use.

Depreciation cost, rental fee, oil, repair, insurance,automobiles

tax, lease.

(3) Amount for business.

1) case 1 : taking out car insurance for employee,recording operating.

→Expense related to car for business x rate for business.(mileage forbusiness in operating record ÷ total mileage).

2) case 2: taking out car insurance for employee, nonrecording operating.

⒜Expense can be recognized for business within 10 million.(depreciation cost 800+maintenance 200)

⒝ Depreciation corresponding amount among depreciation cost, rentalfee can be included in deductible within 8 million yearly and over amount iscarried forward to next year.

⒞ Depreciation cost calculation

   Depreciation costx rate for business ( In the case of lease car, the amount deducted insurancepremium, automobile tax)

If repair and maintenance cost ca not tell the difference,7% of lease fee is calculated. (In the case of rental car, 7% of rental fee isdepreciation cost.