Tax Depreciation Base & Tax Gain ( Loss) on Fixed Asset Disposal
There are four class types of tangible assets according to Cambodia Tax. Below are tax depreciation bases and gain (loss) for each class.
Class 1:
we use straight line method for tax Depreciation expense.
Tax Depreciation Base= Historical Costs + Purchase ( or construction) – disposal Historical Cost
Gain ( Loss ) on Fixed asset Disposal for Class 1 = proceeds from fixed asset disposal – tax net book value.
Net book value = cost – accumulated depreciation.
Please note that full tax depreciation expense in year purchase, but no tax depreciation in year disposal.
Class 2,3,4:
we use declining balance ( Reducing balance) method for tax Depreciation expense.
Tax Depreciation Base= beginning tax net book value + Purchase- proceeds from fixed asset disposal.
Gains ( Loss ) on Fixed asset Disposal for Class 2, 3 and 4 are as follows.
Case 1 : partial disposal for each class
If tax depreciation base > 0, then no loss ( or gain), so we will depreciate these assets onward.
If tax depreciation base < 0, then It is tax gain for fixed asset disposal
Case 2 : Disposal for whole each class
If tax depreciation base > 0, then It is tax loss for fixed asset disposal.
If tax depreciation base < 0, then It is tax gain for fixed asset disposal.