Under the Australian Uniform Capital Allowances System, tax deductions are available for the decline in value of depreciating assets. Certain capital expenditure is immediately deductible (eg mining exploration). Software expenditure and low-cost depreciating assets are pooled and deductions allowed for the decline in value of the pool. The cost of other assets is deducted over the life of the asset.
Most companies maintain a tax asset register in parallel with their fixed asset register, using different depreciation rates for book and tax purposes. Under the new tax consolidation regime, it is now necessary to record and maintain different book and tax costs for assets that have their tax costs reset. Many fixed asset systems are not able to handle this requirement, necessitating the use of separate systems or manual workarounds.
From a tax compliance perspective, tax asset registers need to interface with CGT registers in order to compute the capital gain or loss on disposal of assets.
From a tax-effect accounting perspective, the tax value of assets, after capital allowance deductions, is required to determine the tax balance of assets for deferred tax purposes.
Capital allowance systems should be capable of extracting data for the purpose of completing the ATO Capital Allowances Schedule.