Direct and indirect costs recognized in the KPiR
Tax deductible costs can be divided into direct and indirect costs - in this article they will be discussed what they include and how they should be accounted for.
Direct costs are tax deductible costs which, on the basis of source documents and other documentation, can be classified as the production of a specific good or performance of a specific service. In activities settled on the basis of the tax book of revenues and expenses, direct costs are usually the purchase of commercial goods and basic materials used to manufacture goods or provide a service.
Direct costs - recognition in the KPiR
As a rule, the purchase of commercial goods as well as basic and auxiliary materials, which are direct costs, according to the Regulation of the Minister of Finance of August 26, 2003 on keeping a tax book of revenues and expenses, should be recorded in the KPiR immediately after receiving them, at the latest before handing them over to warehouse, processing or sale. Such an entry should be made in column 10 of the KPiR.
The basic document on the basis of which the goods and materials are entered into the KPiR is the invoice received from the supplier. However, in a situation where the taxpayer has received goods or materials and the invoice has not yet arrived, then according to Art. 16, sec. 2 of the above-mentioned regulation, a detailed description of the received material or commercial goods should be prepared, specifying:
name, surname (company) and address of the supplier,
quantity and type of material or commercial goods,
as well as the unit price and delivery value,
and make an entry in the book based on that description. The description must be confirmed by the date and signature of the person who accepted the delivery, kept as proof of purchase and linked to the invoice sent at a later date. Any deviation from the invoice value must be entered in the book on the day the invoice is received.
It may also happen that the goods ordered in December from abroad will reach the taxpayer in January or subsequent months of the new year together with the invoice documenting this transaction.
In this case, according to the tax authorities, the purchase of goods should be included in the KPiR on the date of physical receipt of the goods, and their value should be included in the final inventory on December 31, because the physical inventory also covers goods in transit, i.e. those that the entrepreneur can dispose of as owner.
This is mentioned, among others, by individual interpretation issued by the Director of the Tax Chamber in Poznań, issued on June 6, 2012, file ref. ILPB1 / 415-237 / 12-2 / AP:
“... as a rule, entries in the tax book of revenues and expenses should be made on the basis of the received accounting documents. This rule also applies to the recording of the purchase of commercial goods. However, in the absence of receipt of an accounting document, a record of the purchase of commercial goods must be made, pursuant to § 17 para. 1 of the quotation of the regulation, immediately after its receipt, at the latest before transfer to the warehouse, processing or sale. (...) the purchased goods (imported), which have not yet been received by the Applicant, in a situation where the Interested Party does not yet have a commercial invoice and customs documents and the goods have not been included in the tax revenue and expense ledger, should be included in the list of nature. "
Indirect costs are tax deductible costs which, on the basis of source documents or other data, cannot be clearly classified as contributing to the production of a specific good or performance of a specific service. This is usually due to the fact that these costs are indivisible, are related to many departments in the enterprise or are not directly related to the creation of a product or service.
Indirect costs - recognition in the KPiR
We can distinguish two methods of recording costs - accrual and cash (simplified).
Indirect costs, as a rule, should be included in the KPiR on the date of issuing the invoice - this is provided for in Art. 22 sec. 6b of the Personal Income Tax Act. This rule applies to taxpayers using the cash method in recognizing costs.
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In the accrual method, indirect costs should also be recognized according to the general rule, i.e. on the date of issuing the invoice documenting a given expense, however, it should be remembered that if the expense exceeds the tax year, this cost should be divided and booked into the periods to which it actually relates.
A taxpayer who decides to use a given method must apply it consistently throughout the tax year - a change may be made at the turn of the year. He does not have to inform the head of the tax office about the choice or change of the cost accounting method.
With the cash-based approach, it is so much simpler that it does not matter to what period a given indirect cost relates, because it is recognized in its entirety on the invoice issuance date.