What needs to be on your Asset Registry?

[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?

[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.

[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.

[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.

[Intothedeepbluesea]

Thanks Clive

[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.

[Francois_za]

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

[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

[ashwiz]

Just use AssetWiz...

[Andromeda]

But beware though, it is petty comprehensive.