Coa help for aat:
I hope that someone can shed some light on the matter:-
Depreciation represents the loss or expense attributed to the use of business property or equipment. It is an entry in the business account that is not necessarily an expense that is actually incurred by the business. The aim of depreciation is to spread the cost of a capital asset (e.g. motor vehicle, plant and equipment, machinery, building) over the period of its useful life, with a portion of the cost being expensed each financial year.
A claim for depreciation can mean that a parent has financial resources available to them that are not necessarily reflected in their taxable income or the resources of the business. In cases that involve depreciation, the Registrar will determine whether receiving a benefit through claiming depreciation expenses results in a parent having greater financial resources or income than his or her taxable income would indicate. The Registrar will consider a parent's complete financial situation including the business' overall financial position and the individual circumstances of the case.
Example: If business income is reduced by $10,000 as a result of depreciation and that amount is then used for day-to-day personal expenses the depreciation amount may be considered as an additional resource and added back to the parent's adjusted taxable income.
Before depreciation expenses can be taken into account as income or a financial resource personally available to the parent, the underlying nature of the depreciation expense must be determined. If the amount claimed as depreciation is used or set aside for replacing equipment (e.g. a capital replacement fund) or is actually accounted for as part of ongoing business activities (e.g. to repay a loan on a depreciating asset or to otherwise reduce business debt), then this is unlikely to provide the parent with additional financial resources. Similarly, if the business operates at a loss even after accounting for depreciation expenses, these expenses will not be available to the parent as a personal financial resource. On the other hand, if the parent spends the benefit of depreciation on day-to-day living expenses or recreational expenses this will most likely be a reason for changing the assessment.
The Registrar can also consider the asset that is the subject of the depreciation expense, whether the asset is used for both business and private activities and whether the written down value is a reflection of market value.
Financial resources. Is the money available to a business for spending in the form of cash. Is it not ?
How can the CSA say that the a parent has financial resources available by the way of Depreciation. ?
Before depreciation expenses can be taken into account as income or a financial resource personally available to the parent, the underlying nature of the depreciation expense must be determined. If the amount claimed as depreciation is used or set aside- How do you use or set aside a paper claim, its not cash…?
, if the parent spends the benefit of depreciation on day-to-day living expenses - How do you spend a paper claim…….?