# Regulatory Compliance Category > Tax Forum >  What needs to be on your Asset Registry?

## Intothedeepbluesea

What needs to be on your Asset Registry, I'm a Sole Prop?

Every little piece of equipment bought, even a stapler/usb cable etc?
What happens if you upgrade the computer, bigger hardrive etc does go on the registry?
Is there a value beneath which it does not need to be on the registry?

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## Beancounter

Apply the definition: "An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity (IASB Framework)." For tax purposes you can expense anything under the value of R7000 and record the rest in the asset register.

If a computer is upgraded, the value of the upgrade is added to the carrying value of the asset in the asset register and depreciated accordingly.

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## Intothedeepbluesea

So anything under R7000 does not need to be on the asset registry?
Say a laptop is bought for R6500 this financial year, next year a SSD drive is fitted for R1800, they both recorded as expenses because they are under R7000 but don't they need to go on the asset registry?

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## CLIVE-TRIANGLE

The guidelines below relate to any asset register. However a sole prop does not have to comply with any recognised standard, but if you do wish to keep a register then this is what it should contain at the minimum:

1. A decent description of the asset and when and from whom it was purchased, its estimated useful life, and the purchase price. This is the permanent information relating to the item.
2. Annually, the amount of depreciation charged to the income statement, the accumulated depreciation and the carrying value (cost less accumulated depreciation).
3. Annually, the exact same exercise but this time using the wear and tear allowances approved by SARS. The carrying value is known as the tax value.
4. If any items are disposed of or scrapped, record it including the amount it was sold for, to who and so on.

A word on the R7000 issue.
SARS will allow you to expense any acquisition up to R7000 in year 1. But this is in fact a wear and tear charge and affects tax, not your financials or accounting records. You might well have a policy that expects you to expense smaller items, but R7000 is somewhat high for an SME or sole prop. Once you have decided on an appropriate limit, items below that limit do not feature in the register as they are charged as expensed equipment in the income statement. So, for your own financial statement purposes you may well capitalise the item, but for tax purposes you may well expense the same thing.

The R7000 allowed by SARS is for a complete set, as opposed to items comprising the set.

Subsequent additions to existing assets, for both tax and financial purposes, must be considered in relation to the main item. In other words, if the laptop was expenses, the drive you are adding to it is also expensed. If it was capitalised, then so too is the addition even if less than the limit.

Subsequent additions to existing items must also be considered for appropriate treatment from a maintenance point of view. If the addition "makes it better", then generally it is capital expenditure. If the addition replaces something that was broken, then it is maintenance. Sounds  simple but often it is not, especially when it relates to extensive plant and machinery, but the principle remains true.

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## Intothedeepbluesea

Thanks for the helpful advice chaps, let me just clarify, I'm referring to the asset registry that SARS expects you to keep , what needs to be on that registry and how is equipment less than R7000 that is treated an expense in the year of purchase reflected if at all on the registry?

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## Intothedeepbluesea

^^ Anyone?

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## CLIVE-TRIANGLE

Basically, exactly what I said above.

SARS have no asset register requirement. Good accounting practise and various international standards require it. On the other hand, if SARS were to question or audit any aspect of capital expenditure or the subsequent allowances arising therefrom, having a register will certainly stand you in good stead.

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## Basment Dweller

Do you need to include real estate assets on your register as well? What about gold, art, etc?

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## Mike C

> SARS have no asset register requirement.


Unless, of course, you are a provisional tax payer and have to list your Assets and Liabilities each year.

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## CLIVE-TRIANGLE

Yip, but that's just totals per category.

Now if they ask for detail of whats in the totals, or detail of the depreciation / wear & tear deduction, then that's when the register will help you.

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Mike C (15-Oct-14)

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## CLIVE-TRIANGLE

> Do you need to include real estate assets on your register as well? What about gold, art, etc?


Unless your are a private person, yes.

If you are a private person it is not necessary, but if the assets generate trading income, then yes it is advisable.

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## Intothedeepbluesea

Thanks Clive, can you help me apply this to a real life situation, business equipment purchased, R3500 backup hard drives, R5800 computer, R12500 camera lens, do all those goods go on the asset registry or just the R12500 lens because it's above R7000?

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## CLIVE-TRIANGLE

I’ll try to clarify on the assumption that you are a sole proprietor and these distinctions are for tax purposes only.

All fixed asset acquisitions should be entered in the asset register. That would then exclude items that you immediately expensed in line with the tax concession.

The wear and tear allowance for tax purposes is the next consideration. Each year you charge what SARS allows until the full value is exhausted.

This is where the R7000 story comes in. If it is a single item, say a desk for a particular office, and is less than R7000, you may claim the full amount in year 1. If it is a backup drive that is part of your IT installation, then probably you should not. 

Certainly a camera lense is part of the camera setup and even if it were less than R7000 you would not expense it.

Another example is a lining for an LDV. You would have acquired the LDV and treated it as a fixed asset. Three months or weeks later you have the loadbin coated for R6000. That coating is part of the LDV and should not be expensed.

Your example of backup drives; SARS may be of the opinion that it is part of your IT setup and therefore cannot be expensed. Similarly, computer stations frequently comprise a number of components, perhaps including a printer, that individually are less than R7000, but together are more.

Adding 2 chairs to the suite in your boardroom should not be expensed.

Adding a desk and chair to a new reception area you just installed, can be expensed. 

So, in a nutshell, the asset register contains details and annual wear and tear of assets that you did _not_ expense.

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## Intothedeepbluesea

But if SARS states that any equipment whatever ever it may be must be expensed if it is a purchase invoiced at below R7000, why would you not expense for example a camera lense that costs R6500 or the R3500 backup hard drive?

I couldn't find any exclusions other than you can't take one invoiced purchase thats above R7000 and try separately expense individual items on the invoice. Say I bought bought 3 backup harddrives at once each at R3500, total R10500 that can't be expensed. But then again that makes no sense, can I buy the 3 hard drives one a day over 3 consecutive days and then be entitled to expenses them?

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## CLIVE-TRIANGLE

Wear and Tear allowances.pdf

The attachment should help, especially 4.3.5

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## Intothedeepbluesea

4.3.5  “Small” items 
The cost of “small” items such as loose tools may be written off in full in the year of 
assessment in which they are acquired and brought into use. A “small” item in this context is one which normally functions in its own right, does not form part of a set 
and  is  acquired  at  a  cost  of  less  than  R7 000  per  item.
13
  The  amount  of  R7 000 
applies to any asset acquired on or after 1 March 2009. 
A table and six chairs which plainly form part of a set can, for example, not be divided 
into individual independent items costing less than the specified amount. The cost of 
such a set amounting to R7 000 or more cannot be written off in full during the year 
of assessment in which the set was acquired and brought into use. 
Furthermore, the “small items” write-off does not apply to assets acquired by lessors 
for the purpose of letting.
14
 Thus lessors that let small items such as DVDs, clothing, 
machinery,  pallets  or  gas  cylinders  must  depreciate  these  assets  over  their  useful 
lives. 


Thanks for the attachment, according to that then the 2 chairs if less than R7500 and backup HDD should be expensed as they are not part of a set and can function in their own right?
The R6500 camera lense, needs the camera body to work so perhaps that must be depreciated?

Or am I seeing it wrong? Not sure what to make of this as any piece of equipment or furniture works in tandem with the rest of what makes your business run, where do you draw the line?

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## CLIVE-TRIANGLE

Don't make it too complicated. Only understand that they are simply trying to prevent you from breaking assets down into their component parts and thereby writing assets off in year 1. 

At the one extreme there are taxpayers who self-build machinery from components and the intention is that the completed machine is worth the sum of it's components.

Another example I suppose is where somebody sources components for a file server and assembles them himself (I have done this) and he should not write off those components, but instead capitalise (regard a a fixed asset) the completed unit at the value of the sum of the components.

Furniture will always be an issue, but you just need to be pragmatic about it. Typically you might buy a boardroom table and 12 chairs. The chairs are R2500 each but in reality it is a boardroom suite at the total cost of 12 chairs and a table.

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## Intothedeepbluesea

I appreciate your replies still not directly answering the question, how do I know when to expense or not?

Say for instance I bought the boardroom table and 8 chairs 5yrs ago cost R12k and was depreciated accordingly. This year I decide I'd like 2 spare chairs total R4500 for when there are visitors and a side table to put refreshments on for R2000, how are those items dealt with? The chairs and the side table do not match the original table/chairs they just what was avail at the furniture shop.

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## CLIVE-TRIANGLE

That's the thing, you need to evaluate the circumstances of each purchase, for tax purposes.

In the example you give it is ok to claim full value on acquisition.

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## Intothedeepbluesea

Thanks Clive

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## dellatjie

Just a word of warning - should you dispose of the asset / computer, you have to add back the wear and tear already claimed, limited to the selling price.

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Francois_za (14-Jan-20)

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## Francois_za

Dellatjie something that so little people do and keep record of and disclose properly, VAT, wear and tear and possible CGT effects

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## dellatjie

What concerns me the most here, is that people are chasing tax deductions. When they need financing, their assets are worth next to nothing, then they dont understand why they cannot get any bank to help them. 

I am not scared of using deferred tax and getting the right values from clients in terms of useful life and residual value. It takes a bit of extra work, but its worth it in the end. 


Sent from my iPhone using Tapatalk

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Dave A (18-Jan-20)

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