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Hi Tax tutor, in the above example there is one car in the special rate pool which is disposed of and the answer shows that in the year of the disposal the car is given write down allowance and the balance carried forward. Is this correct? I thought when the pool has one item and this is disposed off that the full remaining balance would be added to the allowances column as per example 2 in the above chapter. Thank you in advance, Angela
There is no balancing allowance on a pool so long as the business continues to trade and a WDA will continue to be claimed on the pool balance even though there may be no assets still owned by the business until such time as a small pools WDA claim is made.
In example 2 a balancing adjustment arises as it is the disposal of a NON POOL asset – an asset with private use by the PROPRIETOR. This is not the case with Q.11 as the car has private use by an employee NOT the proprietor.Thank you so much tax tutor for the clarification and for answering my numerous questions! At this point i have no questions left and just hope i can remember what i have learned! Good day.
Hi Tax Tutor,
When do we know that we should adjust for Balancing allowance?
If a disposal of Motor Car is made during the year, for example WVD of main Pool b/d 5000, Motor Car Bought during the year is 4000(mail pool) and disposal of motor car 3000.
In this case, should we adjust for balancing allowance?It will be great if you could explain the concept of balancing allowance as its very confusing having one question charging for allowance and another question its not charged.
Thank you in advance for your support
With respect please read the answer that I gave above – there is no balancing allowance on the pool – your question states that the cars are pool assets = no balancing allowance when sold.
If a car had private use by the proprietor then it would not be in a pool so when sold a balancing allowance would arise if sold for less than tax WDV
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