Part 8Intangible fixed assets
Chapter 3Debits in respect of intangible fixed assets
731Writing down at fixed rate: calculation
1
If an election is made under section 730 for writing down at a fixed rate, a debit equal to the lesser of—
a
4% of the cost of the asset, and
b
the balance of the tax written-down value,
must be brought into account for tax purposes in each accounting period beginning with that in which the relevant expenditure is incurred.
2
If the accounting period is less than 12 months, the amount mentioned in subsection (1)(a) must be proportionately reduced.
3
In this section “the cost of the asset” means the cost recognised for tax purposes.
4
The cost of the asset recognised for tax purposes is the same as the amount capitalised for accounting purposes in respect of expenditure on the asset.
5
Subsection (4) is subject to any adjustments required by this Part or Schedule 28AA to ICTA (provision not at arm's length).
6
If there is a part realisation of the asset (see section 734(4)), the reference in subsection (1)(a) to the cost of the asset must be read as a reference to the sum of—
a
the cost recognised for tax purposes in respect of the value of the asset recognised for accounting purposes immediately after the part realisation, and
b
the cost recognised for tax purposes of any subsequent expenditure on the asset that is capitalised for accounting purposes.
7
If there is a further part realisation, subsection (6) applies again.