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For companies

You can defer claim for capital allowance. Circumstances whereby you may not wish to claim capital allowance are:

If your company is in a loss position but you are claiming capital allowance, any unutilised capital allowance can be carried forward to offset against the income for subsequent Years of Assessment (YAs), subject to the shareholding test and business continuity test.

Section 19

Initial allowance (IA) must be claimed in the YA the capital expenditure was incurred. In the event that IA was not claimed, annual allowance (AA) will be computed based on the full cost, that is, 100% of the cost over the prescribed working life*.

AA can be deferred and it need not be claimed consecutively over the prescribed working life* of the asset.
 
Section 19A

Before YA 2009, once a claim is made, the capital allowance will be granted for three consecutive YAs. However, with effect from YA 2009, capital allowance claim made under Section 19A will be allowed deferment i.e. claim made need not be for three consecutive YAs.

Similarly, under the two years write-off for capital expenditure incurred during  the YAs 2010 and 2011, you are allowed to defer your claim for capital allowance.  The rates of 75% and 25% of capital expenditure for the purpose of  computing your capital allowance will continue to apply when you subsequently make a claim for the capital allowance.

Example 1 (Deferment of capital allowance under the two years write-off)

Your company purchase a machine costing $100,000 in YA 2010 by cash. It defers its claim for capital allowance, and only makes a claim in YA 2011 and YA 2013. The capital allowance to be allowed to your company will be as follows:

$

Cost of machine in YA 2010

100,000

YA 2010 AA deferred

-

Written down value (WDV) c/f

100,000

YA 2011 AA (75% of cost)

75,000

Written down value (WDV) c/f

25,000

YA 2012 AA deferred

-

Written down value (WDV) c/f

25,000

YA 2013 AA (25% of cost)

25,000

Written down value (WDV) c/f

NIL


*The number of years of working life is based on the Sixth Schedule of the Income Tax Act (e.g. the working life for motor vehicle is six years and that for motor cycle is eight years)

 

 

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Last Updated on 28 December 2010


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