Executing Input Tax Corrections for Assets

Purpose

The process flow for input tax correction for fixed assets is no different from the standard input tax correction, as long as the postings are acquisition postings with input tax. However, in certain special cases, it is not possible to record correction-relevant postings, for example, for asset retirements. In those cases, you have to enter manual correction basis records in addition to the automatically-created correction basis records.

Prerequisites

You made the necessary settings for the standard input tax correction process in Customizing (see Executing Input Tax Corrections ). In addition, you defined in Customizing the asset classes for which you want input tax distribution and input tax correction to be executed.

Process Flow

  1. Create the correction object .

    You create a correction object to group together the data for the asset that is relevant for input tax corrections.

  2. Post asset transactions.   

    You post to the asset using the normal posting transactions of FI or Asset Accounting. In some of these transactions, you can assign the correction object when you are posting. In others, this assignment is not possible. If it is not possible to make the assignment when you post, you can make the assignment later using the assignment function ( Assign Original Documents ).

  3. Determine option rates and distribute input tax .

  4. The option rates for input tax distribution for assets are determined from the assigned correction object, if they are not entered directly in the document. Therefore, you execute option rate determination for the correction objects, and then perform input tax distribution. The non-deductible part of the input tax is thereby capitalized on the asset.

    Example Example

    Original Document

    Asset: 6,250,000+

    Input tax:1,000,000

    The acquisition was posted to an asset that has a correction object assigned to it. The correction object contains the option rate. The option rate for the date of service is 40% (that is, 40% deductible).

    Input Tax Distribution

    Asset 600,000

    to

    Input tax -600,000

    End of the example.

  5. Enter input tax correction basis records.  

    In the standard process, the system determines the correction basis automatically. However, certain asset postings (such as transfers or retirements) are posted without input tax, and are therefore not subject to input tax distribution. Nonetheless, these postings are relevant for input tax correction and must be included in the correction basis. There are two ways for you to enter the needed data:

    • Partly-automatic using the assignment function, Assign Original Documents :

      The asset transactions that are possibly relevant for the correction are recorded, but information is missing, such as the retired or transferred tax amount. And for asset retirements, the retirement option rate is missing. You have to enter these values manually.

      To do so, first assign the document to a correction object in the assignment report. Select the item, then choose Create Corr. Basis Record . Enter data as required.

    • Manually in the master data of the correction object :

      On the Correction Basis tab page, choose with the quick info text Add New Corr. Basis Record.

      Note Note

      For more information on these two procedures, see Entering Input Tax Correction Basis Records .

      End of the note.

  6. Run input tax correction .

    You correct the input tax as described for account assignment objects.