What is capital allowance (CA) and who can claim

• What is capital allowance 
• Who can claim capital allowance 
• What is "plant and machinery" 
• Examples of qualifying fixed assets 
• Examples of non-qualifying fixed assets 

What is capital allowance

Capital allowances are deductions that you can claim on the wear and tear of fixed assets bought and used in your trade or business.

Capital allowances are given in place of depreciation and other capital expenditure, which are not deductible for income tax purposes.

Who can claim capital allowance

If your company carries on a trade or business, your company can claim capital allowances on expenditure incurred on the provision of "plant and machinery" for use in the trade or business. The exception is where capital allowance for an asset is specifically prohibited under the Income Tax Act (e.g. "S" plate private passenger car).

Capital allowance should not be claimed on the expenditure incurred on equipment (for example, computers) bought solely for donation purpose.

What is "plant and machinery"

"Plant and machinery" generally refers to a fixed asset having the following characteristics:

• It is not a trading stock of your company (not for resale purposes);
• It functions as an apparatus used for carrying out the business or trade activities of your company; and

• It is not part of the setting or part of the premises in which your business is carried on. (Nevertheless, you may wish to claim Section 14Q deduction for expenditure incurred on renovation or refurbishment works.)

For more details, please refer to e-Tax Guide on Machinery and Plant: Section 19/19A of the Income Tax Act (147KB).

Examples of qualifying fixed assets:

• Carpet
• Containers used for carriage of goods by any mode of transportation
• Electrical & electronic equipment (e.g. air-conditioning system, security/alarm system, sprinkler system and electrical appliances)
• Furniture and fixtures
• Industrial plant and machinery
• Motorcycle and bicycle
• Motor vehicle (goods / commercial vehicle such as pick up, van, truck, lorry and bus)
• Movable partitions 
• Office equipment (e.g. computer, printer, photocopier, fax machine and telecommunication equipment)
• Showcase or display lightings
• Signboard and other signage
• Venetian blind & curtain

Examples of non-qualifying fixed assets:

• Awning*
• Container office
• Designer's fees on renovation
• Doors, roller shutters and gates*
• Electrical fittings* (except cabling for identifiable plant, switchboard and transformer)
• False ceiling, ceiling boards and other ceiling work*
• Fixed partitions, walls, wall tiles and other wall finishes*
• Floor tiles, raised floors or other flooring work*
• Lightings and light fittings*
• Motor vehicle (S-plate private passenger car)
• Water and gas pipings*

*For renovation expenditure incurred between 16 Feb 2008 to 15 Feb 2013, please refer to Section 14Q deduction for expenditure incurred on renovation or refurbishment works.