Tax

Where tax base is higher than carrying value that means that there is an amount equal to that tax base that we are able to set off in future years by way of capital allowances against the profits of future years.

That compares with the lower carrying value figure that is, of course, the amount that we shall be writing off against future years’ profits by way of depreciation

So our depreciation will be added back in the tax computation and, in its place, we shall deduct the higher figure by way of capital allowances

“and are we taxed on the asset/ and tax is deductible on the liability/?”

Sorry, I don’t understand this question!

OK?

The tax base of the asset is the amount of that asset that has not yet been allowed as an expense by the Revenue authorities

This figure differs from the carrying value and that carrying value represents the original cost of the asset less the accumulated depreciation that we have claimed since we acquired the asset

Forget the carrying value for a moment … concentrate on the tax base

This is the amount of the asset that has not yet been allowed by the Revenue for us to claim by way of capital allowances against previous years’ profits … but we shall be able to claim this figure by way of capital allowances against future years’ profits

So if you can understand that, then how can you ask this “do we pay tax for our asset”??

NO! That tax base of the asset represents the future tax deductible amount