Yes — the period in which you sell or purchase fixed assets can impact the increase or decrease of tax. The key factor in this impact is the principle of depreciation.
Depreciation as the Framework
Depreciation is the process of allocating the cost of acquiring fixed assets over their useful life.
When you sell a fixed asset, the difference between:
- The sale price, and
- The book value
may have an impact on your corporate income tax.
Practical Advice
The timing of the purchase or sale of a fixed asset should be aligned with:
- The fiscal year
- The planned financial result
- Expected profit and tax liabilities
Good accounting advice can significantly affect your tax bill.
Planning the sale or purchase of a fixed asset? Contact Finance Plus for an analysis of the tax impact.
