Under Section 19A, assets that qualify for 100% write-off are computers, prescribed automation equipment and low-value assets.
Computers and Prescribed Automation Equipment
The prescribed automation equipment can be found in this list:
Some commonly claimed prescribed automation equipment are computers, laptops, printers and computer software.
Under the 100% write-off, capital allowance is allowed in the form of annual allowance (AA) where:
For assets purchased by cash:
AA = 100% of the cost of the asset
For assets purchased under hire purchase:
AA = 100% of the principal payment (and deposit paid where applicable)
You can also choose to defer the capital allowance claims to subsequent YAs. Please refer
Deferring Capital Allowance Claims to find out more.
Examples of 100% Write-Off in One Year for Computer and Prescribed Automation Equipment
Your company purchased a computer for $2,000 and a printer for $200 by cash in the year 2019.
AA for computer = 100% x $2,000 = $2,000
AA for printer = 100% x $200 = $200
Your capital allowance schedule is as follows |
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Description | Computer ($) | Printer ($) |
Cost | 2,000 | 200 |
YA 2020 AA | 2,000 | 200 |
Tax written down value (TWDV) c/f | 0 | 0 |
You company purchased a computer for $2,000 in the year 2018 under hire purchase. The company has a 31 Dec year end.
AA = 100% of the principal payment (plus deposit paid where applicable)
Assuming the details of the hire purchase agreement are as follows:
Purchase price | | $ 2,000 |
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Deposit | | $ 100 |
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Hire purchase interest | | $ 50 |
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Number of instalments | | 5 |
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Amount payable per instalment | | $ 390 |
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Hire purchase interest per instalment | $50 / 5 | $ 10 |
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Principal payment per instalment | $390 - $10 | $ 380 |
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Assuming a deposit of $100 and 2 instalments were paid in the year 2018 and the remaining three instalments were paid in the year 2019.
Deposit and principal payments in the year 2018 = $100 + (2 x $380) = $860
Principal payments in the year 2019 = 3 x $380 = $1,140
YA 2019 AA = 100% x $860 = $860
YA 2020 AA = 100% x $1,140 = $1,140
Your capital allowance schedule is as follows: |
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Description | Computer ($) |
Cost | 2,000 |
YA 2019 AA | 860 |
Tax written down value (TWDV) c/f | 1,140 |
YA 2020 AA | 1,140 |
TWDV c/f | 0 |
Low Value Assets
Companies may choose to write off low-value assets in one year provided certain conditions are satisfied. A low-value asset is one that does not cost more than $5,000.
Companies that do not wish to use the one-year write-off may write off the cost of the asset over three years, two years (for YA 2021 and YA 2022 as announced in Budget 2020 and 2021) or its prescribed working life.
Conditions for One Year Write-Off of Low-Value Assets
To claim a one-year write-off of low-value assets under Section 19A(10A) of the
Income Tax Act (ITA), including those acquired on hire purchase, the following conditions must be satisfied:
- The assets must be
plant and machinery that qualify for
capital allowances under Sections 19, 19A or 19A(1E) of the ITA;
- The assets must be acquired for the purposes of your trade, profession or business;
- Each low-value asset must not cost more than $5,000; and
- The total claim for a one-year write-off of all low-value assets must not exceed $30,000 per YA.
If the amount exceeds $30,000, you can still claim capital allowances over three years, two years for YA 2021 and YA 2022 or the prescribed working life for the low-value assets exceeding the cap for the YA.
How the One-Year Write-Off for Low-Value Assets Works
The low-value assets that can be written off in one year in any YA, subject to a total claim of $30,000, are:
- Low-value assets that are acquired in the YA; and
- Low-value assets that are acquired before the YA where:
- no claim for capital allowance has been made before (i.e. claim for capital allowance was
deferred previously).
- a
claim for capital allowance was previously made under Sections 19, 19A(1) or 19A(1E) and there is a tax written down value brought forward to the current YA.
Hire Purchase Assets
An asset acquired under hire purchase terms must cost no more than $5,000 in order to qualify for the one-year write-off on its instalment paid in any YA.
Indicate clearly in your capital allowance schedule the assets that are claimed on the basis of Section19A(10A) and submit the capital allowance claims accordingly in your income tax returns.
Identifying Low-Value Assets that Qualify for 100% Write-Off
Company A purchased 7 pieces of Asset X at $4,400 each at a total cost of $30,800 in the year 2019.
In the year 2018, Company A also purchased:
- Asset Y at $1,500 for which claim for capital allowance was deferred; and
Asset Z at $3,000, for which claim for capital allowance was made under Section 19A(1) (i.e. three-year write-off).
Company A claimed capital allowance of $1,000 ($3,000 / 3 years) on Asset Z in YA 2019, and a tax written down value of $2,000 ($3,000 - $1,000) on Asset Z was carried forward to YA 2020.
All the 9 pieces of assets qualify for capital allowance.
Computing the Total Claim under One-Year Write-Off
Company A can claim a one-year write-off on the cost of the following assets in YA 2020:
Cost of 6# pieces of new Asset X ($4,400 x 6) | $ 26,400 |
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Add: Cost of Asset Y purchased in the year 2018 | $ 1,500 |
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| |
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Tax written down value of Asset Z brought forward from YA 2019 | $ 2,000 |
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Total claim under one-year write-off | $ 29,900* |
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Explanation of the Claim
* Within the total cap of $30,000 per YA.
# Company cannot claim the 7th piece of Asset X under Section 19A(10A) as the additional cost of $4,400 will exceed the $30,000 cap, i.e. $4,400 x 7 = $30,800.
Company A can claim capital allowances on this 7th piece of Asset X over three years or over its useful life instead. Assuming that capital allowances are claimed over three years, the capital allowances for YA 2020 for this asset will be $1,467 ($4,400 / 3 years).
In total, the capital allowance claim for YA 2020 will be $31,367 ($29,900 + $1,467).
See Also
New! As announced in Budget 2020 and 2021, businesses are given an option to accelerate the
write-off over two years, instead of three years or over the
prescribed working life of the asset, on the cost incurred in acquiring the
asset during the basis period for YA 2021 and YA 2022. This is to support businesses who
intend to invest in new assets and ease the cashflow of businesses.
The rates of accelerated capital allowance allowed are as follows:
- 75% of the cost incurred to be written
off in the first year (i.e. YA 2021 or YA 2022); and
- 25% of the cost incurred to be written
off in the second year (i.e. YA 2022 or YA 2023).
No deferment of capital allowance claim is allowed under this
option.
Businesses can continue to claim capital allowance based on the current one
year or three year write-off under S19A or write-off over the prescribed working life
under section 19 if they do not wish to claim capital allowance over two
years.
For new assets
acquired under a hire-purchase agreement (“HP asset”) during the basis period
for YA 2021 or YA 2022, the accelerated rates of 75% and 25% will apply to all the
instalments (principal component) paid on such HP assets notwithstanding that
the instalments may be paid in a basis period subsequent to the basis period
for YA 2021 or YA 2022.
Examples of Write-Off Over Two Years
Your company purchased office equipment for $3,000 with cash in the year 2020.
Your capital allowance schedule is as follows: |
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Description | Office equipment ($) |
Cost | 3,000 |
YA 2021 AA (75% of cost) | 2,250 |
Tax written down value (TWDV) c/f | 750 |
YA 2022 AA (25% of cost) | 750 |
TWDV c/f | 0 |
Your company acquired an office equipment for $2,000 in the year 2020 by hire purchase. The details of the hire purchase agreement are as follows:
Purchase price | | $ 2,000 |
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Deposit | | $ 100 |
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Hire purchase interest | | $ 50 |
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Number of instalments | | 5 |
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Amount payable per instalment | | $ 390 |
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Hire purchase interest per instalment | $50 / 5 | $ 10 |
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Principal payment per instalment | $390 - $10 | $ 380 |
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Assuming that a deposit of $100 and two instalments were paid in the year 2020 and the remaining three instalments were paid in the year 2021.
Deposit and principal payments in the year 2020 = $100 + (2 x $380) = $860
Principal payments in the year 2021 = 3 x $380 = $1,140
AA for each YA is computed as follows:
Year of payment | Deposit and principal amount paid ($) | Amount of AA ($) to be claimed in: |
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| | YA 2021 | YA 2022 | YA 2023 |
2020 | 860 | 645 | 215 | |
2021 | 1,140 | | 855 | 285 |
Total | 645 | 1,070 | 285 |
Your capital allowance schedule is as follows:
Description | Office equipment ($) |
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Cost | 2,000 |
YA 2021 AA | 645 |
Tax written down value (TWDV) c/f | 1,355 |
YA 2022 AA | 1,070 |
TWDV c/f | 285 |
YA 2023 AA | 285 |
TWDV c/f | 0 |
Under this method, capital allowance is granted over an asset's prescribed working life based on the Sixth Schedule of the Income Tax Act.
To simplify capital allowance
claims under section 19, the prescribed working life of assets in the Sixth
Schedule will be streamlined to 6, 12 and 16 years, in the following manner:
If the prescribed working life of
the asset in the Sixth Schedule is 12 years or less, businesses may make an
irrevocable election to claim capital allowance over either 6 or 12 years;
If the prescribed working life of
the asset in the Sixth Schedule is 16 years, businesses may make an irrevocable
election to claim capital allowance over 6, 12 or 16 years.
The above change will apply to
assets acquired in the basis periods relating to YA 2023 and subsequent
YAs. It will also apply to assets acquired in basis periods relating to
YA 2022 and prior YAs, if the business had deferred and yet to start its
capital allowance claims for the assets.
To qualify for the above, businesses are to make the
irrevocable election for the number of years of working life for the asset at
the time of their tax filing for the YA relating to the basis period in which
the asset was acquired. For assets
acquired in basis periods prior to the basis period for YA 2023,
businesses are to make the election at the time of the tax filing for
YA 2023.
The initial allowance (IA) and annual allowance (AA) are computed as follows:
For asset purchased with cash:
In the first YA relating to the year in which the fixed asset was purchased:
IA = 20% x the cost of asset
AA = (80% x the cost of asset) / number of years of working life*
In the second and subsequent YA:
IA is not applicable
AA = (80% x the cost of asset) / number of years of working life* (same as the first YA)
For asset purchased under hire purchase:
In the YA where there is a deposit paid and/ or instalment payments:
IA = 20% of the principal amount (and deposit paid where applicable)
AA = (80% x the cost of asset) / number of years of working life*
In the YA where there is no payment made:
IA is not applicable
AA = (80% x the cost of asset) / number of years of working life*
*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 motorcycle is eight years)
You can also choose to defer the capital allowance claims to subsequent YAs. Please refer to Deferring Capital Allowance Claims to find out more about deferring your capital allowance claims.
Capital allowance claim for motor vehicles
No capital allowance is to be given on private cars (S-plated cars), RU-plated cars and company cars (Q-plated or S-plated cars), except where the cars are registered as "private hire cars"/"cars for instructional purpose" and are hired out or used for providing driving instruction in the course of the company's business.
Apart from private cars (S-plated cars), RU-plated cars and company cars (Q-plated or S-plated cars), costs of other motor vehicles such as vans, lorries and motor cycles acquired for business use would qualify for capital allowances under Section 19 or 19A of the Income Tax Act.
Expenditure incurred on obtaining a Certificate of Entitlement (COE) to acquire a motor vehicle is part of the cost of the motor vehicle. If the motor vehicle qualifies for capital allowance, the cost of obtaining the COE may be included when claiming capital allowance on the motor vehicle. In addition, the amount paid by a registered owner of an existing vehicle upon renewal of the COE to enable the continued operation of the vehicle will be regarded as an additional cost of the vehicle for the purposes of claiming allowances under Section 19 or 19A.
However, for expenditure incurred to obtain a COE which is not subsequently used to acquire a vehicle, the expenditure incurred will not be granted capital allowance.
Foreign registered vehicles
From YA 2014 onwards, capital expenditure incurred on a car registered outside Singapore and used exclusively outside Singapore for business purposes will be granted capital allowance. There is no cap on the capital allowance.
Summary table showing the different ways to claim capital allowances
How to calculate | Qualifying assets | Annual
allowance (AA) |
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Over working life of asset
[Section 19] | - Apply to all qualifying assets
- Refer to Sixth Schedule of the Income Tax Act for working life
From YA 2023, option to claim: - 6 or 12 years for prescribed working life of 12 years or less
- 6,12 or 16 years for prescribed working life of 16 years
| - Initial allowance (IA)
= 20% of cost - AA = (80% of cost) / No. of years of working life
|
Three-year write-off
[Section 19A(1)] | Apply to all qualifying assets | AA = 1/3 of cost |
Two-year write-off | Apply to all qualifying assets acquired during the basis period relating to YA 2021 or YA 2022 | YA 2021/ YA 2022 AA = 75% of cost YA 2022/ YA 2023 AA = 25% of cost |
One-year write-off
(for specific assets)
[Section 19A(2)] | - Computers
- Prescribed automation equipment listed in Income Tax (Automation Equipment) Rules 2004; and Amendment Rules 2010 (effective from 15 Dec 2010)
| AA = 100% of cost |
One-year write-off
(only for low-value assets)
[Section 19A(10A)] | Low-value assets - Cost of each asset not more than $5,000
- Total claim for one-year write-off of all such assets capped at $30,000 per YA
| AA = 100% of cost |