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Fraser Andrew Wilson Steel

Pooled Assets Depreciation (Australia)

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Hello All

I am looking at the our Sage system to manage the tax book (Australia).  We currently are under utilizing the sage system and the TAX book is driven though an excel worksheet.  As part of our improvement(s) we are looking at transferring the Tax into the Sage system. 

One question I have (and there will probably be many) is how to account for Pooled assets,  assets <$1k (AUD)but greater than $300.  The tax office rate is 18.75% in first year and 37.5 there after.

The others are..

(2) How can I introduce this into the Sage system,  I presume if I create the asset and insert 18.75 as the rate come the new year I would have to manually change the rate for all the assets to 37.5 (not that there is many but still a painful process)

(3) if I change the rate in the new financial year,  how will that effect the depreciation already run,  obviously I do not want to change the prior depreciation.  

(4) Can I run depreciation for the year in one run?,  instead of running tax each month,  is there a way to run it at year end ?

  • 0
    verified answer

    Hello Fraser,

     

    The basic design of the Sage Fixed Assets program is for U.S. Tax rules which I have found over the years to be a bit different from the rest of the world but in following IRS’s rules, there is very little wiggle room on inserting you own rates.

     

    Since I only did a quick Google search to find an example of the calculation you are looking for (so feel free to correct me if am wrong), it appears you have two general methods of depreciation, Prime cost method – which seems to be calculated and a double declining balance rate over a finite life and Diminishing value method – which seems to calculate on a rate I did not quite understand at first glance on the NBV from the year before.

     

    In a U.S. Company, you will not find a very good match for both calculations. In a Canadian Organization, we may be able to come up with a close approximations of those calculations but The Canadian tax rates being based on whole percentages. I found nothing with precisely 18.75% for the first year anywhere. Canadian Organization does have the T2S(8) Canadian Tax form in it which does calculate in the bases of Pooled assets which closely matches the Diminishing value method but it is a Canadian Tax form and a quick read down the Canadian Tax Classes does not show a 37.5% rate with Half that taken in the first year in the in any of them. (Yes, I just noticed the 18.75% is half 37.5%. With a calculator and a phone call I can be much clearer on these things.)

     

    It is possible to setup Custom Depreciation Methods but Custom Method calculations will always be a percentage against the Acquired Value of the asset with a finite life. This would not allow for the Diminishing value method.

     

    There is no requirement within the program to run depreciation Month-By-Month. In the Depreciation dialog, you can select any date – past or future – and get your Value, Prior Accum, Current YTD and Accum on the Depreciation Expense report which will be accurate for that date. As long as you ignore the Depreciation This Run column, and Set a Period Close and have not made any changes to the assets or the Calendars, the program is designed to allow the running of depreciation to any given date.

  • 0
    HI Delray
    Many thanks for you input with this. Looks like i will have to review this project as the more i delve into the process the likely hood of it happening is minimal.
    I will keep investigating to see if there are any alternative approaches.

    Thanks again for you help with this.

    Regards
    Fraser

*Community Hub is the new name for Sage City