Summary: Atx

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• 7 CA, IBA, Agri allowance

• 7.1 CA

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• What are the criteria to claim capital allowances?

  Capital allowances will only be made available if: [QIBO]
  

  • The capital expenditure incurred by the person is in respect of qualifying plant expenditure.
  • The person who incurs the capital expenditure is carrying on a business.
  • Such assets are used for the purposes of his business.
  • The person is the owner (legal or beneficial owner) of the asset at the end of the basis period.

• What is the condition for a non-SME to be granted a 100% special allowance on small value assets?

  A non-SME will be granted a 100% special allowance in the year they are incurred if the following conditions are fulfilled:
  a) the value of each asset does not exceed RM2,000;
  b) total 100% special capital allowances claimed on such small value assets shall be restricted to RM20,000 per YA for non-SME;
  c) the person claiming is the owner of such assets;
  d) such assets are in use in his business.

• What is the allowance condition for a SME on small value assets?

  A SME will be able to claim 100% CA on small value assets costing not more than RM2,000 in a YA without being restricted to RM20,000.

• When must an adjustment be made for capital allowances on a plant or machinery?

  An adjustment must be made when a plant or machinery is:
  

  • sold,
  • discarded,
  • destroyed, or
  • ceased to be used for business

  in the basis period for a year of assessment.

• What is the formula for calculating the balancing charge or balancing allowance?

  Disposal value (DV) – RE = Balancing charge/ balancing allowance
  RE = cost - IA - AA - NA

• How is the disposal value (DV) determined in a normal case?

  In a normal case, DV = MV

• What is imposed as a balancing charge for the year of assessment in the basis period when an asset is disposed of within less than two years?

  Any capital allowance that has been made should be withdrawn will be imposed as a balancing charge for the year of assessment in the basis period in which the asset was disposed of.

• How is the capital allowance (CA) calculated?

  CA = Qualifying plant expenditure (QPE) x CA rate

• What payments qualify for capital allowances under HP assets?

  Only payments of the deposit + the capital portion of the instalments would qualify for capital allowances as they represent capital payments.

• What portion of the instalments is not eligible for capital allowances under HP assets?

  The interest portion of the instalments paid will not be eligible for capital allowances as it represents interest expenses which will be deductible from the business’s gross income by virtue of s 33(1)(a).