Fixed assets - what you should know
Fixed assets are usually the basic assets of entrepreneurs. The more fixed assets there are in the company's assets, the more important it is to recognize them correctly in the tax books.
Fixed assets - definition
Within the meaning of the Personal Income Tax Act, fixed assets are considered to be owned or jointly owned by the taxpayer, acquired or manufactured on their own, complete and fit for use on the date of acceptance for use:
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structures, buildings and premises owned separately,
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machines, devices and means of transport,
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Other items
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with an expected period of use longer than a year, which are used by the taxpayer for the purposes related to his business or put into use on the basis of a rental or lease agreement or an agreement specified in art. 23a point 1.
Therefore, in order for a given asset to be classified as fixed assets, it must meet the following conditions:
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be owned or jointly owned by the taxpayer,
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be purchased or manufactured on its own,
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its expected useful life in the company should be longer than one year,
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be used by the taxpayer for the purposes related to his business or put into use on the basis of a rental, lease or leasing agreement.
Moreover, in order to classify an item as fixed assets, its value should, as a rule, amount to PLN 3,500 net for VAT payers or PLN 3,500 gross for non-VAT taxpayers.
How to determine the initial value of an asset?
Before a given item is introduced to the company and included in fixed assets, its initial value should be determined. In the case of purchase of property components, the initial value is the purchase price.
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Important! The purchase price is the amount due to the vendor increased by the costs associated with the purchase accrued by the date on which the asset was put into use.
The costs related to the purchase, which may increase the initial value of the fixed asset, include the following costs:
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Moreover, when determining the initial value of a fixed asset, remember to include together the value of all components of a given fixed asset, without which it could not function.
Fixed assets with a value of up to PLN 3,500
The limit amount for qualifying assets as fixed assets is PLN 3,500. If the initial value of an item does not exceed PLN 3,500, it is not necessary to include the item in the fixed assets register.
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Important! Expenses incurred for the purchase of a fixed asset, the value of which does not exceed PLN 3,500, can be included directly in tax costs in the month of putting it into use. Then the taxpayer is not obliged to include it in the register of fixed assets. |
It should also be borne in mind that even if the initial value of the item does not exceed PLN 3,500, the taxpayer may enter it into the register of fixed assets and make depreciation write-offs. Then the entrepreneur has two options - he can make a one-off depreciation write-off or make write-offs on general principles.
One-time depreciation
If a taxpayer decides to apply a one-time depreciation to an asset whose value does not exceed PLN 3,500, he should enter it into the fixed assets register no later than in the month when it is put into use. In such a case, the one-off depreciation write-off should be included in the KPiR in the month of commissioning or in the following month.
Depreciation on general terms
An item with a value of up to PLN 3,500, which was introduced to fixed assets, will constitute the so-called low-value asset. In a situation where the entrepreneur decides to make depreciation write-offs on general principles, he will be subject to the same principles of depreciation as other fixed assets with a value above PLN 3,500.
Fixed assets with a value in excess of PLN 3,500
If the item purchased by the entrepreneur meets the above-mentioned definition of fixed assets and its value exceeds PLN 3,500, as a rule, it should be included in the fixed assets register. In this case, the entrepreneur may also apply, under certain conditions, one-time depreciation or depreciation on general terms.
One-time depreciation
One-off depreciation under the de minimis aid may be used by taxpayers who started operating in a given tax year. In addition, the so-called small taxpayers have the option of using one-off depreciation also in subsequent years of operation. In order to be able to use it, the taxpayer may not exceed the limit entitling to the status of a small taxpayer, i.e. the amount of EUR 1,200,000 (converted into PLN, in 2016 - PLN 5,092,000).
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Important!
The amount of one-off depreciation write-offs in 2016 may not exceed EUR 50,000 of the total value of these write-offs. After exceeding this amount, the taxpayer will not be able to use the one-time depreciation. Converted into PLN, in 2016 the value of depreciation write-offs may not exceed PLN 212,000. |
Depreciation on general terms
If the entrepreneur wants to depreciate a fixed asset according to general principles, then apart from one-time depreciation, he has a choice of several other methods. Entrepreneurs themselves choose the depreciation method for individual fixed assets. The chosen method of depreciation of the fixed asset should be applied until the depreciation of the given asset is completed or its sale.
Methods of depreciation of fixed assets
As mentioned above, the entrepreneur has a choice of several depreciation methods.
Linear method
This is the primary method of depreciation. It consists in evenly spreading the depreciation write-offs over time, as a result of which these write-offs are included in the tax costs in the same amount each year. The amount of the depreciation is equal and the depreciation rate is the same throughout the depreciation period of the fixed asset.
The degressive method
The declining method is characterized by higher depreciation charges in the first years of depreciation. Depreciation rates are multiplied by a factor not higher than 2.0. In this method, depreciation write-offs decrease until the write-offs calculated using the declining method equate with write-offs that would be calculated using the straight-line method, and then in the following years the annual amount of depreciation is calculated using the straight-line method. The degressive method should not be applied to the depreciation of passenger cars.
Individual method
This method is allowed for used or improved fixed assets that were first entered into the register of fixed assets. However, the period of their depreciation for a given fixed asset cannot be shorter than that specified in the regulations.
Pursuant to Art. 16j (1) of the PIT Act, if individual depreciation is used, the depreciation period cannot be shorter than:
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for fixed assets included in groups 3-6 and 8 of the Classification of Fixed Assets:
a) 24 months - when their initial value does not exceed PLN 25,000,
b) 36 months - when their initial value is higher than PLN 25,000 and does not exceed PLN 50,000,
c) 60 months - in other cases,
2) for means of transport, including passenger cars - 30 months,
3) for buildings (premises) and structures other than those mentioned in point 4 - 10 years, with the exception of:
a) permanently attached to the land commercial and service buildings listed in type 103 of the Classification and other non-residential buildings listed in type 109 of the Classification, permanently attached to the land,
(b) kiosks with a cubature of less than 500 m3, mobile homes and substitute buildings
- for which the depreciation period cannot be shorter than 3 years,
4) for non-residential buildings (premises) for which the depreciation rate from the List of depreciation rates is 2.5% - 40 years minus the full number of years that have passed from the date of putting them into use for the first time until the date of entry into the register of fixed assets and intangible assets kept by the taxpayer, but the depreciation period may not be less than 10 years.
How do I post a purchase of a fixed asset in wCompany?
The purchase of a fixed asset should be booked through the tab: EXPENDITURE >> ADD >> VAT INVOICE / INVOICE (without VAT) >> FIXED ASSET >> PURCHASE OF FIXED ASSETS.
After selecting KŚT, the system will automatically adjust the depreciation rate. In the line Initial value there is a field where you can enter any remaining costs that increase the initial value of the fixed asset.
If the initial value of a fixed asset consists of several invoices, the main one should be included in the Rates section, and the sum of the remaining invoices is entered in the "Value. initial + ". In order to deduct VAT from other invoices, go to the tab: RECORDS >> VAT REGISTERS >> PURCHASE REGISTER >> ADD AN ENTRY by selecting the Fixed asset box in the Advanced tab.
After saving, the system will automatically print the OT document, which should be printed from the tab: RECORDS >> ASSET >> DOCUMENTS. Copies of documents confirming the initial value of the fixed asset should be attached to the printout.
The posted expenditure will be entered in the VAT Purchase Register. On the other hand, the KPiR will receive depreciation write-offs in accordance with the depreciation schedule.
