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Managing tax fixed assets

Managing tax fixed assets

Tony O’Reilly, Barry Sullivan and Peter Xing introduce the KPMG Tax Fixed Asset Review Automator, designed to specifically alleviate an organisation’s pain points in the tax fixed assets review process to achieve accuracy, efficiency and insight.

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Excel formulas, multiple worksheets, calculations that confuse, irreconcilable differences – How did the Tax Fixed Asset Register (FAR) become so cumbersome? The answer in many ways is quite simple. Global enterprise resource planning (ERP) systems that don’t quite manage Australian tax depreciation rules well have warranted the need for tax FARs to be managed externally in Excel. In addition, having multiple finance systems, staff turnover, and new business acquisitions often means the overburdened tax manager could only provide a cursory glance over the FAR at tax return time. This makes the integrity of the tax FAR difficult and time-consuming to accurately maintain.

Some advanced tax functions are trying to use finance systems such as SAP, Oracle, and Microsoft Dynamics to manage their tax fixed asset registers.  The challenge is ensuring the accuracy and efficiency of on-boarding new fixed assets and maintaining existing assets on the register for tax purposes.

New business acquisitions also put pressure on tax functions to review capitalised assets and accounting effective lives allocated by the finance team, often giving rise to inefficient and incorrect tax outcomes. Often a “near enough is good-enough” approach to transferring the assets into the tax FAR is the default position due to time constraints.

On top of this, the Australian Tax Office (ATO) is increasingly reviewing companies with large tax depreciation claims via Streamlined Assurance Reviews under the Justified Trust initiative, applying data analytical approaches in the review. The responsibility for tax depreciation claims and capital allowance disclosures often resides solely with the tax function, scoped out of tax compliance engagements by third party tax advisors due to the costly nature of the exercise. This poses an ongoing tax risk to Management and the Board.

To read more of this article and to learn more about the KPMG Tax Fixed Asset Review Automator, please log in or register for KPMG Tax Now. 

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