Credit Loan stands for deduction for wear and describes the taxable reduction in value of assets in fixed assets. If an asset is invested in fixed assets and is used for the generation of income, the costs of production or acquisition of the asset cause no reduction of the assets of the taxpayer. The asset only replaces the bank balance or cash on hand with which the asset has been produced or acquired. When achieving income and surplus income, this replacement occurs. If the asset is a wear-and-tear item, the production or purchase does not constitute asset reduction, but the use. Every year, a portion of the costs incurred can be deducted. The costs result from the useful life.
The Credit Loan is characterized by the income tax law and is a synonym for the term ” depreciation “, which is used commercially. In tax law, however, the variants of depreciation differ; in economic terms, any depreciation is called a depreciation. Among the variants of the tax law depreciation: AfA is called the commercial law, scheduled depreciation. Depreciation on non-current assets, which is unscheduled according to tax law, is the deduction for extraordinary wear and tear, abbreviated AfaA. The depreciation of the partial depreciation is the unscheduled amortization of current assets under commercial law. Furthermore, there is the variant of the collective depreciation. The depreciation depends on two criteria: the amount of the production and acquisition costs and the usual useful life.
The deduction can be determined on different variants:
The Credit Loan in same annual amounts, also known as linear depreciation. Here, the annual amounts of deduction are always the same. The costs of acquisition or production are distributed equally over the years of use. The useful life is prescribed by law, but you can choose between the depreciation percentage and the depreciation amount.
The depreciation in decreasing annual amounts, also known as degressive depreciation. For taxable goods in fixed assets, tax deductible deduction is permitted. Every year, the declining balance depreciation deducts a fixed percentage from the book value of the previous year. However, this percentage may not exceed 2.5 times the depreciation rate of the linear depreciation and may not exceed the value of 25%.
According to the Income Tax Act, it is deductible from the month of manufacture or purchase. The depreciation table, in which the useful life is specified, determines the depreciation period. If the asset divests prematurely from the financial year, for example, through the sale, each month in the annual depreciation must be fully used.