TAXATION 1

CAPITAL ALLOWANCES & CHARGES

Introduction
Term:
- Qe- Qualifying expenditure
- Initial allowances – once
- Annual allowances – until fully utilized
(100%)
- Residual expenditure/ tax written value
Plant
Qualifying expenditure (QE)
- Means an apparatus by a person for
Capital allowances is claimed if:
carrying on his business but does not
- Carriying the business include intangible asset, or any asset used
- Incurred qualifying plant expenditure or and function as a place within which a
qualifying building business is carried on.
- Used in the business
Plant Not plant
horse Floating restaurant
book Human
Movable partitions Light fittings
Small item Golf course
Car park
Customer database

Qualifying plant expenditure Installation of plant or machinery

- Expenditure incurred on the alteration of
an business an existing building for the
purpose of installing that machinery or
plant and other expenditure incurred
incidental to the installation
- Expenditure incurred on preparing,
cutting, tunelling, levelling land to
prepare a site of installation. NOT
EXCEED 10%
- Expenditure incurred on fish pond,
animal pens, chicken houses, cages,
building and other structural
improvement on land for the purpose of
poultry farms, animal farms, inland
fishing industry or other agricultural or
pastoral pursuits.
- Include preaprring, cutting, tunnelling,
levelling land in order to prepare as ite
for the installation.
- does not exceed 10% of agregrate the cost
of the machinery and the cost of
preparing site.
Foreign exchange difference
- the realized loss upon the foreign
exchange would be a part of the capital
allowances
initial allowance (IA)
- given only once
- IA would be given if fulfil all the
conditions:
o Incurred capital expenditure on
the provision plant and machinery
in the YA
o For the purpose of business

CAPITAL ALLOWANCES & CHARGES 1

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CAPITAL ALLOWANCES & CHARGES

o The person in the owner of the

asset
Asset brought and sold in the same year
- IA can be claim
Annual Allowance
Temporary disuse
- Given every year until full utilized
- AA will continue to be claimes even if
- AA would be given if all the conditions
plant n machinery is not use but it is
fulfill:
deemed to be ‘in use’ if:
o Incurred
o Plant and machinery was use
o Asset is owned by owner
before disuse
o Use for business purposes
o Constantly maintained
Residual expenditure o Period disuse is temporary
Unutilized portion of the qualifying expenditure General disoposal value
- Total QE minus:
o IA
AA
Also known as the ‘tax written down value’
Hire purchase transaction

QE for motor vehicle

- Commercial vehicle (lorry, truck, bus, etc)
are not restricted.

Asset owned less than 2 years

CAPITAL ALLOWANCES & CHARGES 2

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CAPITAL ALLOWANCES & CHARGES

- It will be clawback (apa yg dh claim, dia

akan campur balik)

IA & AA percentage

CAPITAL ALLOWANCES & CHARGES 3