A beginners guide to filing capital statements in Cyprus
This article details a beginners guide to capital statements; what to include in them, what the figures mean and how to understand and interpret them; avoiding common pitfalls many individuals experience along the way with filing their own.. Capital statements (also referred to as wealth statements) are similar to profit & loss sheets for a company except capital statements are typically used to measure and record an individual’s finances using an official document accumulated on differing dates.
The statements are then joined or what’s known as bridged by identifying the entries that have resulted in the increase of the net wealth in the overruling timeframe against expenditure that have resulted in the decrease of the net wealth in the same timeframe. Any unaccounted for gaps in an individuals capital statement signify inconsistencies and the consequent requirement for authorities to look into why.
What is net wealth?
Net wealth or net assets is the cumulative value of assets owned, minus the cumulative value of the liabilities owed on the same date.
Why are assets and the liabilities calculated?
The main determination of capital statements is not to define how well or badly an individual’s finances are; rather to explain and validate the increase or decrease of assets during the timeframe between two successive capital statements.
What type of entry defines an asset?
Reportable assets can be illustrated as the following entries:
- Bank credits, including cash payments.
- Investments such as shares or bonds; any profit from other entities or loan interests charged.
- Payables to loans obtained from third parties (called negative assets).
- Immovable and movable property or other miscellaneous other assets at acquirement price.
What should the reportable level of detail be?
Ideally, the individually reported monetary amounts should be rounded up or down to the nearest thousand, therefore avoiding flooding the overall representation with insignificant digits.
How are two capital statements connected (or bridged)?
The inflows of funds, which result in an increase of the previously reported net assets, and the outflows, which result in a decrease of the previously reported net assets, must be identified under the following categories:
- Income from work such as a salary or trade.
- Income from shares dividends or capital gains.
- Property-related income (rent, royalties etc.)
- Redemption of life assurance policies.
- Pension income.
- Any other donations or gifts received.
- Taxes or other obligations: such as property tax, social insurance contributions.
- Other taxes levied (such as property taxes etc.).
- Interest expenses and related costs (on loans or insurance payments owed etc.).
- Any other capital losses or expenses from the period.
Do capital statements have to be certified?
Yes, a qualified Accountant or Service Provider should certify the statements looking for moderation and comprehensiveness and for being in synchronisation with other related records such as filed tax returns and bank statements. The enlisting of a professional Accountant or licensed Service Provider will eliminate any mistakes made by those obligated to file such statements.
For assistance with the filing of your annual capital statement, Eltoma has qualified Accountants on hand to help with any filing requirements. Contact us for more details.
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