Can depreciation be suspended?
Depreciation of fixed assets is the possibility of making write-offs from the initial value of a fixed asset and intangible assets. This process lasts from the month following the month in which the fixed asset was incorporated into the enterprise to the month in which the equalization of depreciation write-offs with the initial value or liquidation, sale or shortage of the asset takes place.
Assets subject to depreciation
The assets of the enterprise that can be depreciated are specified in the Personal Income Tax Act:
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Art. 22a of the Personal Income Tax Act 1. Subject to Art. 22 c, owned or jointly owned by the taxpayer, acquired or manufactured on its own, complete and fit for use on the date of acceptance for use:
1) structures, buildings and premises owned separately, 2) machines, devices and means of transport, 3) other items - with an expected period of use longer than one year, used by the taxpayer for the purposes related to his business activity or put into use on the basis of a rental or lease agreement or an agreement referred to in art. 23A, paragraph 1, called fixed assets. 2. They are also subject to depreciation, subject to Art. 22c, regardless of the expected period of use: 1) investments in foreign fixed assets accepted for use, hereinafter referred to as "investments in foreign fixed assets", 2) buildings and structures built on someone else's land, 3) the assets listed in para. 1, not constituting the ownership or co-ownership of the taxpayer, used by him for the purposes related to the activities under the contract referred to in article 1. 23A, paragraph 1, concluded with the owner or co-owners of these components - if, in accordance with the provisions of chapter 4a, depreciation shall be made by the user - also known as fixed assets, 4) maritime transport rolling stock under construction (PKWiU 30.11). |
and the Corporate Income Tax Act:
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Art. 16a of the Corporate Income Tax Act 1. Subject to Art.16 c, owned or jointly owned by the taxpayer, acquired or manufactured on its own, complete and fit for use on the date of acceptance for use: 1) structures, buildings and premises owned separately, 2) machines, devices and means of transport, 3) other items - with an expected period of use longer than one year, used by the taxpayer for the purposes related to his business activity or put into use on the basis of a rental or lease agreement or an agreement referred to in art. 17A, paragraph 1, called fixed assets. 2. They are also subject to depreciation, subject to Art. 16c, regardless of the expected period of use: 1) investments in foreign fixed assets accepted for use, hereinafter referred to as "investments in foreign fixed assets", 2) buildings and structures built on someone else's land, 3) the assets listed in para. 1, not constituting the ownership or co-ownership of the taxpayer, used by him for the purposes related to the activities under the contract referred to in article 1. 17A, paragraph 1, concluded with the owner or co-owners of these components - if, in accordance with the provisions of chapter 4a, depreciation shall be made by the user
- also called fixed assets; 4) maritime transport rolling stock under construction |
Suspension of depreciation
Making depreciation write-offs by a taxpayer is not his privilege, but an obligation. In general, depreciation cannot be discontinued, except in three situations:
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if a given fixed asset or intangible asset is subject to liquidation,
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if a given fixed asset or intangible asset has been sold or donated,
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if there is a shortage of a given fixed asset or intangible asset.
However, there are situations in life when a fixed asset that is not fully depreciated ceases to be used in business. Usually it is related to the suspension of the operation of the enterprise or the complete liquidation of the company. Then, in accordance with Art. 22c point 5 updof and art. 16c point 5 of the updop, the entrepreneur is prohibited from depreciation of assets that are not used as a result of the above-mentioned situations.
Important! The cessation of business activity results in tax consequences in relation to the fixed assets unused for this reason. They are no longer depreciated from the month following the month in which the activity was suspended or closed.
The above-mentioned cases are the only situations in which the taxpayer may stop making depreciation write-offs on the fixed asset.
Improve the company's results - lower the depreciation rate
Taxpayers using the straight-line method of depreciation may lower the depreciation rates. Based on the provisions of: art. 22i paragraph. 5 updof and art. 16i paragraph. 5 updop have the right to lower the rates specified in the List of depreciation rates for individual fixed assets. The reduction of depreciation rates can be applied both to those already depreciated as well as to those newly introduced into the enterprise. The reduction of depreciation rates does not depend on any factors, nor is it specified to which rates such write-offs can be reduced.
