Preparation of Declarations with Additional Depreciation 

Purpose

The tax law allows you to claim additional deprecation on certain assets. The additional depreciation rate usually depends on the average number of additional working hours of machines over the fiscal year. As a result, you do not know what the final rate of additional depreciation will be until the end of the fiscal year (generally speaking, March 31). That means that you cannot prepare a final declaration until then. However, in the meantime, you can use provisional rates of additional depreciation, which you can use to prepare a provisional declaration.

Prerequisites

If you want the Property Tax Report to calculate additional depreciation, implement the Business Add-In in Customizing for Financial Accounting (FI), by choosing Asset Accounting  ® Information System  ® Property Tax Report  ® Add-In: Additional Depreciation.

Process Flow

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       1.      At the end of January, you calculate the provisional additional depreciation rates. You enter them in the system as described in the Add-In.

       2.      You then prepare a tax declaration.

The declaration shows the assets’ tax book values and tax evaluation amounts using the provisional additional depreciation rates.

The system saves each asset’s data as normal, including which additional depreciation rate it used.

After you have prepared the declaration, do not post any more asset transactions for the tax year to be reported. You may change an asset’s master data, such as its useful life, but the final declaration still shows the same useful life as the provisional declaration, because the report reads the master data stored for the provisional run.

       3.      At the end of the fiscal year (March 31), you calculate the final additional depreciation rates for your company.

       4.      You enter the final additional depreciation rates in the system.

       5.      You prepare and file a final declaration.

The Property Tax Report checks each asset to see if the final additional depreciation rate is different from the provisional rate. If so, it recalculates the asset’s tax book value and tax evaluation amount.

For each asset, the report then recalculates its decided value, its taxable amount, and the difference in the taxable amount between the provisional and final runs. Then you can save the data for use in next year’s tax declaration.