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Thread: What needs to be on your Asset Registry?

  1. #11
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    Quote Originally Posted by Basment Dweller View Post
    Do you need to include real estate assets on your register as well? What about gold, art, etc?
    Unless your are a private person, yes.

    If you are a private person it is not necessary, but if the assets generate trading income, then yes it is advisable.

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    Thanks Clive, can you help me apply this to a real life situation, business equipment purchased, R3500 backup hard drives, R5800 computer, R12500 camera lens, do all those goods go on the asset registry or just the R12500 lens because it's above R7000?

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    I’ll try to clarify on the assumption that you are a sole proprietor and these distinctions are for tax purposes only.

    All fixed asset acquisitions should be entered in the asset register. That would then exclude items that you immediately expensed in line with the tax concession.

    The wear and tear allowance for tax purposes is the next consideration. Each year you charge what SARS allows until the full value is exhausted.

    This is where the R7000 story comes in. If it is a single item, say a desk for a particular office, and is less than R7000, you may claim the full amount in year 1. If it is a backup drive that is part of your IT installation, then probably you should not.

    Certainly a camera lense is part of the camera setup and even if it were less than R7000 you would not expense it.

    Another example is a lining for an LDV. You would have acquired the LDV and treated it as a fixed asset. Three months or weeks later you have the loadbin coated for R6000. That coating is part of the LDV and should not be expensed.

    Your example of backup drives; SARS may be of the opinion that it is part of your IT setup and therefore cannot be expensed. Similarly, computer stations frequently comprise a number of components, perhaps including a printer, that individually are less than R7000, but together are more.

    Adding 2 chairs to the suite in your boardroom should not be expensed.

    Adding a desk and chair to a new reception area you just installed, can be expensed.

    So, in a nutshell, the asset register contains details and annual wear and tear of assets that you did not expense.

  4. #14
    Full Member Intothedeepbluesea's Avatar
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    What needs to be on your Asset Registry?

    But if SARS states that any equipment whatever ever it may be must be expensed if it is a purchase invoiced at below R7000, why would you not expense for example a camera lense that costs R6500 or the R3500 backup hard drive?

    I couldn't find any exclusions other than you can't take one invoiced purchase thats above R7000 and try separately expense individual items on the invoice. Say I bought bought 3 backup harddrives at once each at R3500, total R10500 that can't be expensed. But then again that makes no sense, can I buy the 3 hard drives one a day over 3 consecutive days and then be entitled to expenses them?

  5. #15
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    Wear and Tear allowances.pdf

    The attachment should help, especially 4.3.5

  6. #16
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    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?

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    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.

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    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.

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    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.

  10. #20
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    Thanks Clive

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