The initial value of the fixed asset and the bank commission

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Many entrepreneurs decide to finance the purchase of fixed assets with a loan. In such a situation, the question of how the bank commission affects the initial value of the fixed asset arises on the part of the persons running the business. Let's check whether the initial value of the fixed asset can be increased by a bank commission and whether it can constitute a tax cost.

Bank commission as tax cost

The tax costs of entrepreneurs may include expenses incurred in order to achieve income, maintain or secure the source of income (Article 22 (1) of the PIT Act), apart from the expenses listed in Art. 23 of the PIT Act.

In order to include the bank commission as costs, it is necessary to determine whether the bank charges incurred are related to the conducted business activity. If the bank commission relates to a transaction related to the conducted business activity, e.g. a transfer to the Social Insurance Institution, Tax Office or for a contractor, such an expense may, in principle, be included in company costs, because it is related to securing the source of income.

If a loan is taken out for business purposes, a commission for launching and interest on the loan is added to it. If the loan finances the business, the interest may be counted as business expenses. In the case of bank interest, it is important when it was paid, not to what period it relates to. The costs do not include the capital part of the loan being repaid.

As a rule, interest is charged to costs on the basis of internal evidence. If the loan is intended for the purchase of a fixed asset, until it is included in the corporate property, the interest increases the value of the fixed asset, after this period, the interest, based on internal proof, is recognized as costs.

Fixed asset - definition

In order to correctly make tax calculations, it is necessary to correctly classify the expenses incurred - directly to costs or to be recognized as an asset and subject to depreciation. In order to be considered a fixed asset, an asset must meet all of the following conditions:

  • be acquired or manufactured on its own,

  • be complete and fit for use when accepted for use,

  • be owned or jointly owned by the taxpayer,

  • the expected period of its use in the company is longer than one year,

  • will be used in connection with the conducted business activity or put into use on the basis of a lease, tenancy or rental agreement.

Additionally, the initial value of the fixed asset should be higher than PLN 3,500 (net for taxpayers exempt from VAT and gross for taxpayers exempt from VAT).

If the purchase meets the conditions for recognition as a fixed asset, but its value does not exceed PLN 3,500, the expenditure may be recognized directly as tax deductible costs.

Assets that meet the conditions for recognition as fixed assets are subject to entry in the register of fixed assets and depreciation in accordance with the list of depreciation rates included in Annex 1 to the PIT Act, depending on the KŚT.

Asset

Initial value of the fixed asset - general rules

The initial value of a fixed asset acquired by purchase is the purchase price increased by expenses incurred in connection with its acquisition until the date of acceptance of the fixed asset for use. (...) in particular, the costs of transport, loading and unloading, insurance on the way, assembly, installation and start-up of programs and computer systems, notary fees, fiscal and other fees, interest, commission, and less tax on goods and services, with except for cases where, in accordance with separate provisions, the tax on goods and services does not constitute input tax or the taxpayer is not entitled to a reduction of the amount of tax due by input tax or a refund of the tax difference within the meaning of the Act on tax on goods and services. In the case of import, the purchase price includes customs duty and excise duty on the import of assets - Art. 22 g of paragraph 1. 3 of the PIT Act.

In the case of active VAT payers, the initial value, as a rule, increases only by the net amount. However, VAT can be deducted on an ongoing basis.

In the case of taxpayers exempt from VAT, the initial value is increased by the gross amount.

Example 1.

Mr. Jeremi runs a sole proprietorship and is an active VAT payer. On August 1, he purchased a fixed asset for the amount of PLN 7,000 gross (PLN 5,691.06 net, PLN 1,308.94 VAT 23%), the purchase was financed from the loan. The fixed asset was put into operation on August 15. Until then, additional costs of assembling the fixed asset were incurred in the amount of PLN 100 net. On the part of Mr. Jeremy, a question arose: will the maintenance costs increase the value of the fixed asset and is it possible to deduct VAT from the invoice?

The value of the maintenance performed before the asset is accepted for operation will increase the initial value of the asset. A fixed asset with the initial value of PLN 5,791.06 should be entered into the register of fixed assets. Additionally, VAT can be deducted from the maintenance invoice in August.

Depreciation write-offs will be included in the costs from the month following the acceptance of the fixed asset for use. The exception is one-time depreciation, where the entire fixed asset is included in the costs in the month of taking the fixed asset for use.

Example 2.

Mr. Eugeniusz is a VAT-exempt taxpayer, on September 1 he purchased a fixed asset for PLN 25,000 gross (PLN 20,325.20 net, PLN 4,674.80 VAT 23%), the purchase was financed from the loan. The fixed asset was put into operation on September 25, and by that time the insurance expenses were incurred by way of the fixed asset in the amount of PLN 350 gross. On the side of Mr. Eugeniusz a question arose: will the costs of insurance on the way increase the initial value of the fixed asset?

The value of the maintenance performed before the asset is accepted for operation will increase the initial value of the asset. A fixed asset with an initial value of PLN 25,350 should be entered into the register of fixed assets.

Depreciation write-offs will be included in the costs from the month following the acceptance of the fixed asset for use. The exception is one-time depreciation, where the entire fixed asset will be included in the costs in the month of taking the fixed asset for use.

Purchase financed with a loan - bank commission and the initial value of the fixed asset

If the purchase was financed with a loan, in order to establish the initial value, the purchase price should be increased by the expenses specified in Art. 22 g of paragraph 1. 3 of the PIT Act, incurred until the date of acceptance of the fixed asset for use. The bank commission related to the purchase of a fixed asset on credit also increases its initial value. The value determined in this way is the basis for determining the value of depreciation write-offs.

Example 3.

Mr. Janusz is an active VAT payer, on July 1 he purchased a fixed asset for PLN 12,300 gross (PLN 10,000 net, PLN 2,300 VAT 23%), the purchase was financed from the loan. The fixed asset was put into operation on September 1, until then it was necessary to pay off 2 loan installments of PLN 600 each, including PLN 50 - the interest part and an additional PLN 10 of the bank commission. On the part of Mr. Janusz, a question appeared: will the interest part of the installment and the commission increase the initial value of the fixed asset?

Yes, the interest value of the installment in the amount of PLN 100 (2 * PLN 50) and the bank commission of PLN 10 increase the initial value of the fixed asset.

A fixed asset worth PLN 10,110 should be entered into the records on September 1. VAT can be deducted in July.

Example 4.

Mr. Emil is a VAT-exempt taxpayer, on July 1 he purchased a fixed asset for PLN 15,000 gross (PLN 12,195.12 net, PLN 2,804.88 VAT), he financed the purchase from a loan. The fixed asset was put into operation on September 1, until then it was necessary to pay off 2 loan installments of PLN 500 each, including PLN 30 - the interest part, and an additional PLN 15 of the bank commission. On the part of Mr. Emil, a question appeared: can the initial value of the fixed asset be increased by the interest part of the installment and the commission?

Yes, the interest value of the installment in the amount of PLN 60 (2 * PLN 30) and the bank commission of PLN 15 increase the initial value of the fixed asset.

A fixed asset worth PLN 15,075 should be entered into the records on September 1.

Asset depreciation

The value of purchased fixed assets is depreciated based on its chosen method (straight-line or degressive depreciation) and the depreciation rate. The list of depreciation rates is included in Annex 1 to the Personal Income Tax Act. The value of a fixed asset is included in costs through depreciation write-offs. There is no freedom in choosing the depreciation rate, for each category of measure it is strictly defined in the above-mentioned annex depending on the KŚT.

Bank commission of the fixed asset in the wFirma.pl system

In order to post the purchase of a fixed asset in the wFirma.pl system, go to the EXPENDITURE >> ADD EXPENSE >> VAT INVOICE >> PURCHASE OF FIXED ASSETS tab.

The value of the invoice should be entered in the STAWKI tab. On the other hand, the expenses that increase the initial value of the fixed asset should be entered in the WART field. INITIAL + e.g. it will be bank fees. The recorded fixed asset will be included in the register of fixed assets and will be subject to depreciation.

In the event that an active taxpayer of VAT on expenses increasing the initial value of a fixed asset is entitled to a deduction of VAT, this amount should be indicated in the VAT register of purchases, for this purpose, go to the tab RECORDS >> VAT REGISTERS >> VAT REGISTER >> ADD ENTRY, in the generated window, complete the data in accordance with the state on the invoice, additionally, in the ADVANCED tab, select the FIXED ASSET field.

VAT will be included in the VAT register of purchases. On the other hand, the value of the fixed asset will be included in the company's costs as depreciation write-offs in accordance with the adopted rate and depreciation method.

To sum up, the bank commission and other costs related to the company loan for the purchase of a fixed asset increase the initial value of the fixed asset until it is accepted for use in the company. After this period, the bank commission should be charged directly to the company's costs.