Working with Your Accountant on Depreciation:
Common Questions

Five questions worth asking: 1. Are you maintaining separate tax and accounting depreciation schedules for my assets? 2. What is my NTA on an accounting basis, and how does that compare to any licensing or lending thresholds I need to meet? 3. Are there any assets I have written off for tax that have significant remaining accounting value or replacement cost? 4. What is the expected tax impact when I dispose of my current major assets? 5. Is my depreciation register being maintained in a way that supports my insurance, CAPEX planning, and borrowing conversations?

Depreciation done properly is far more than compliance. It affects your balance sheet, your borrowing capacity, your insurance coverage, your licence compliance, your CAPEX planning, and the price you can achieve if you sell the business. A purely compliance-driven approach to depreciation is leaving value on the table and, in some cases, creating risk that is entirely avoidable.

Ask it to show you both the tax WDV and the accounting carrying amount for each asset separately. If it can only show you one figure, or if the two figures are always the same, it is not maintaining parallel records correctly. Good depreciation software should handle Division 40, Division 43, Division 328 pooling, the instant asset write-off, and balancing adjustments correctly by design, not by the user having to know and manually apply each rule. For accountants Purpose-built depreciation software should handle the interaction between the simplified depreciation rules (Division 328) and the standard rules (Division 40), apply the correct effective life and method to each asset, calculate balancing adjustments automatically on disposal, and maintain both the tax and accounting views simultaneously. Software that cannot do all of these things requires the user to compensate with manual knowledge — which recreates the key-person risk the software was meant to remove.