Balancing Adjustment Report 

Use

The Balancing Adjustment Report serves to fulfill the Singapore Income Tax Act, Sections 10 (4), 20 (5A), and 20 (6), regarding allowances and charges following the disposal or sale of assets. The act requires businesses to report allowances or charges associated with any disposal or sale of qualified assets in the year that the transaction was effected.

To access the report, on the SAP Easy Access screen, choose Accounting ® Financial Accounting ® Fixed Assets ® Info System ® Reports on Asset Accounting ® Day-to-Day Activities ® Country Specifics ® Singapore ® Balancing Adjustment Report.

Allowances and Charges

The concept of allowances and charges is similar to that of gains and losses on the sale of fixed assets in the book area. When the tax write-down value (similar to the net book value in book area) of an asset is worth more than the proceeds from its sale, a balancing allowance arises, which you can claim together with the normal capital allowances. A balancing charge, on the other hand, occurs where the proceeds from the sale of an asset are greater than the tax write-down value.

A balancing allowance can be said to correspond to a loss on the sale of an asset, while a balancing charge refers to a gain. However, where gains are concerned, the total amount of a balancing charge is restricted to the total amount of the capital allowance already granted. To sum it, the balancing adjustment is calculated as follows:

Balancing charges/allowances = tax write-down value – the smaller of (sales proceeds, acquisition costs/qualifying costs), where tax write-down value = acquisition costs/qualifying costs – total allowances granted