This article is to assist you to understand some of the reasons why you might find that your tax depreciation figures are different to your accounts depreciation figures when you feel they should be exactly the same.
Even if you have exactly the same depreciation settings for accounts and for tax, you may find different written down values between the two sets of books for any given period.
I.e. the balances seem to be different between the two methods of reporting for exactly the same asset(s) with exactly the same settings. Therefore your reporting when comparing between the two is slightly different when you don't expect it to be.
There are a few reasons why this could be:
1. Selection of calculation either by daily or monthly in your register settings.
Register settings > General > Accounts depreciation:
For example in a New Zealand register (not an isolated jurisdiction), the IRD unlike other jurisdictions, calculates tax depreciation on a monthly basis, NOT on a daily basis.
Therefore if an asset is purchased on 31 March being the last day of the tax year, one whole month’s depreciation can be claimed.
Therefore if, for example, you chose to initially setup your AssetAccountant register with the daily calculation method for accounts, there will be a slight variation between your tax and accounts Written Down Value (WDV) because of the difference in calculation method used in each.
2. Leap years (for Australian subscribers)
The Australian Tax Office (ATO) deviates from standard accounting treatment in leap years.
With the ATO, depreciation for the year is always divided by 365 in order to get daily depreciation.
In IFRS accounting, depreciation is divided by the number of days in the year to get daily depreciation.
So you effectively get 'another day' of depreciation for tax in leap years as your total depreciation will be 366 * 1/365 * annual depreciation.