How to process Capital Allowance or Works Deduction?

Support Query

How do I record building allowances (for example Division 43 capital works allowances and building write-offs) in Simple Fund 360? 

Solution 

Two options are available. A Capital Allowance deduction can be

1) recorded as a Tax Adjustment at the year-end;

2) or by creating a Tax Adjustment through the Depreciation Schedule.

Pre-requisites 

• Ensure you have recorded your property purchase in Simple Fund 360 
• Ensure that the investment sub-account has the correct tax label in the chart of accounts and that account is unitised
• For more information, refer to How to add a Rental Property Investment.

Tax Adjustment

From the Main Toolbar, go to Compliance.
Select Period compliance from the list.
Select Tax Adjustment.

1. From the Tax Adjustment screen under the Tax Label select the Capital Works Expenditure Label D1 (deductible) or D2 (non-deductible). 
   
   
2. Manually calculate the deductible and/or non-deductible and enter the amount.
   
   
3. Select the property from the drop-down list.
   
   
4. To input more than one adjustment select +Add another tax adjustment.
   
   
5. Click Save.

Note: Tax adjustments should be recorded prior to the final Create Entries Process for the financial year. The +Add another tax adjustment icon will NOT show if entries have been processed for the year. 

Depreciation Schedule 

To record the Capital Allowance Deduction from the Depreciation Schedule follow the steps below: 

From the Main Toolbar, go to Compliance.
Navigate to Period compliance
Select Depreciation.

Method 1:

1.  Select

2. Search for the asset by either the Account Code or Name.

3. Purchase Date/Opening Cost will be automatically calculated and will include any cost base adjustments if applicable. This field is editable and open for on-screen adjustments.

4. Select Capital Works Deduction as the Depreciation Method. 

5. Select Save.

Method 2:
* Use Method 2 when you're linking both multiple depreciable assets to a property, as well as a capital works deduction to the same property. 

1. Select

2. Add the depreciable assets that you wish to calculate depreciation for. For additional help with this step, please see How to record asset depreciation using Property Worksheet

3. Search for the property by either Account Code or Name

4. Enter relevant information for the asset that you are claiming the Capital Works Deduction on. Refer to the example below, remembering to select Capital Works Deduction as the Depreciation Method. 

5. Select Add to Registry

6. Select Close

The Capital Works Expenditure will flow through as a Tax Adjustment, if you had a pension policy in place it would also split between D1 and D2.

This will populate on your tax return section C when you create entries to 30/06

How to adjust/reverse Capital Works?

Please follow the steps below to reverse a capital works deduction:

1. Reverse the Create Entries.

2. Navigate to the Transaction List and filter on Deprecation.

3. Delete the single-sided journal = 0.00. The journal will have the following narration: Depreciation - Capital Works Expenditure Adjustment - 30/06/20XX

4. Redo the Capital Works Deduction.