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2023-12-19 11:45| 来源: 网络整理| 查看: 265

100% Write-Off in 1 YearWrite-Off Over 2 YearsWrite-Off Over 3 YearsWrite-Off Over the Prescribed Working Life of the Asset100% Write-Off in 1 Year [Sections 19A(2) and 19A(10A)]

Under Section 19A of the Income Tax Act 1947, assets that qualify for 100% write-off are:

Computers [Section 19A(2)]Prescribed automation equipment [Section 19A(2)]Low-value assets [Section 19A(10A)]Computers and Prescribed Automation Equipment

Commonly claimed prescribed automation equipment include computers, laptops, printers and computer software. View the full list of prescribed automation equipment (PDF, 25KB).

Under the 100% write-off, capital allowance is given in the form of annual allowance (AA) where:

For assets purchased with 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)

Example 1: Asset Purchased with Cash

Your company purchased a computer for $2,000 and a printer for $200 with cash in the financial year 2020.

AA for computer = 100% x $2,000 = $2,000

AA for printer = 100% x $200 = $200

Your company’s capital allowance schedule is as follows:

Description Computer ($) Printer ($) Cost 2,000 200 YA 2021 AA 2,000 200 Tax written down value (TWDV) c/f 0 0 Example 2: Asset Purchased under Hire Purchase

Your company purchased a computer for $2,000 under hire purchase in the financial year 2020.

The details of the hire purchase agreement are as follows:

Purchase Price $2,000 Deposit $100 Hire purchase interest $50 Number of instalments 5 Amount payable per instalment $390 Hire purchase interest per instalment $50/ 5 = $10 Principal payment per instalment $390 - $10 = $380

A deposit of $100 and 2 instalments were paid in the financial year 2020 and the remaining 3 instalments were paid in the financial 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

YA 2021 AA = 100% x $860 = $860

YA 2022 AA = 100% x $1,140 = $1,140

Your company’s capital allowance schedule is as follows:

Description Computer ($) Cost 2,000 YA 2021 AA 860 TWDV c/f 1,140 YA 2022 AA 1,140 TWDV c/f 0 Low-Value Assets

Your company may choose to write off low-value assets in 1 year. The total claim for a 1-year write-off of all low-value assets must not exceed $30,000 per YA.

A low-value asset is one that does not cost more than $5,000. An asset acquired under hire purchase terms also qualifies for the 1-year write-off on the instalments paid in any YA if its original cost does not exceed $5,000.

If your company does not wish to use the 1-year write-off, you may write off the cost of the asset over 2 years (for YAs 2021 and 2022 as announced in Budget 2020 and 2021), 3 years or its prescribed working life.

In any YA, the low-value assets that can be written off in 1 year, subject to a total claim of $30,000, are:

Low-value assets acquired in the YALow-value assets 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

If the amount of all the low-value assets exceeds $30,000, you can still claim capital allowances over 2 years (for YAs 2021 and 2022), 3 years or the prescribed working life for the low-value assets exceeding the cap for the YA.

Example: 1-Year Write-Off of Low-Value Assets

Company A purchased 7 pieces of Asset X at $4,400 each in the financial year 2020.

In the financial year 2019, Company A also purchased:

Asset Y at $1,500, for which the capital allowance claim was deferredAsset Z at $3,000, for which a capital allowance claim of $1,000 was made in YA 2020 under Section 19A(1) (i.e. 3-year write-off), and the tax written down value carried forward to YA 2021 is $2,000

All 9 pieces of assets qualify for capital allowances.

Company A can claim a 1-year write-off on the cost of the following assets in YA 2021:

Cost of 6 pieces of new Asset X ($4,400 x 6) $26,400 Add: Cost of Asset Y purchased in the year 2019 $1,500 Add: TWDV of Asset Z brought forward from YA 2020 $2,000 Total claim under 1-year write-off$29,900* * Within the total cap of $30,000 per YA.

Company A cannot claim the 7th piece of Asset X under Section 19A(10A) in YA 2021 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 the 7th piece of Asset X over 2 years, 3 years or over its working life instead. Assuming that capital allowances are claimed over 3 years, the capital allowance for YA 2021 for this asset is $1,467 ($4,400/ 3 years).

In total, the capital allowance claim for YA 2021 is $31,367 ($29,900 + $1,467).

Write-Off Over 2 Years [Section 19A(1E)]

Your company may accelerate the write-off over 2 years, instead of 3 years or the prescribed working life of the asset, on the cost incurred in acquiring the asset during the basis periods for YAs 2021 and 2022. This is to support businesses that intend to invest in new assets and ease the cash flow of businesses.

As announced in Budget 2023, your company will also have the option to accelerate the write-off over 2 years, instead of 3 years or the prescribed working life of the asset, on the cost incurred in acquiring the asset during the basis period for YA 2024.

The rates of accelerated capital allowances are as follows:

75% of the cost incurred to be written off in the first year (i.e. YA 2021 or YA 2022 or YA 2024); and25% of the cost incurred to be written off in the second year (i.e. YA 2022 or YA 2023 or YA 2025).

No deferment of capital allowance claim is allowed under this option.

The write-off over 2 years is optional and your company can continue to claim capital allowances over 1 year, 3 years or the prescribed working life.

For new assets acquired under a hire purchase agreement during the basis periods for YAs 2021, 2022 and 2024 the accelerated rates of 75% and 25% apply to all the instalments (principal component) paid on such hire purchase assets in the relevant basis periods, notwithstanding that the instalments may be paid in a basis period after the basis periods for YAs 2021, 2022 and 2024.

Example 1: Asset Purchased with Cash

Your company purchased office equipment for $3,000 with cash in the financial year 2020.

Your company’s capital allowance schedule is as follows:

Description Office Equipment ($) Cost 3,000 YA 2021 AA (75% of cost) 2,250 TWDV c/f 750 YA 2022 AA (25% of cost) 750 TWDV c/f 0 Example 2: Asset Purchased under Hire Purchase

Your company acquired an office equipment for $2,000 under hire purchase in the financial year 2020.

The details of the hire purchase agreement are as follows:

A deposit of $100 and 2 instalments were paid in the financial year 2020 and the remaining 3 instalments were paid in the financial 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 ($) YA 2021 AA ($) YA 2022 AA ($) YA 2023 AA ($) 2020 860 645 215 2021 1,140 855 285 Total 645 1,070 285

Your company’s capital allowance schedule is as follows:

Description Office Equipment ($) Cost 2,000 YA 2021 AA 645 TWDV c/f 1,355 YA 2022 AA 1,070 TWDV c/f 285 YA 2023 AA 285 TWDV c/f 0 Write-Off Over 3 Years [Section 19A(1)]

Your company may choose to write-off all assets that qualify for capital allowances over 3 years.

Under the 3-year write-off, capital allowance is given in the form of annual allowance (AA) where:

For assets purchased with cash:

AA for each year = 1/3 of the cost of asset

For assets purchased under hire purchase:

AA = 1/3 of the principal payment (and deposit paid where applicable)

Example 1: Asset Purchased with Cash

Your company purchased office equipment for $3,000 with cash in the financial year 2020.

AA for each YA = 1/3 x $3,000 = $1,000

Your company’s capital allowance schedule is as follows:

Description Office Equipment ($) Cost 3,000 YA 2021 AA 1,000 TWDV c/f 2,000 YA 2022 AA 1,000 TWDV c/f 1,000 YA 2023 AA 1,000 TWDV c/f 0 Example 2: Asset Purchased under Hire Purchase

Your company acquired office equipment for $2,000 under hire purchase in the financial year 2020.

The details of the hire purchase agreement are as follows:

A deposit of $100 and 2 instalments were paid in the financial year 2020 and the remaining 3 instalments were paid in the financial 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 ($) YA 2021 AA ($) YA 2022 AA ($) YA 2023 AA ($) YA 2024 AA ($) 2020 860 287 287 286 2021 1,140 380 380 380 Total 287 667 666 380

Your company’s capital allowance schedule is as follows:

Description Office Equipment ($) Cost 2,000 YA 2021 AA 287 TWDV c/f 1,713 YA 2022 AA 667 TWDV c/f 1,046 YA 2023 AA 666 TWDV c/f 380 YA 2024 AA 380 TWDV c/f 0 Write-Off Over the Prescribed Working Life of the Asset (Section 19)

Under this method, capital allowances are given over an asset's prescribed working life based on the Sixth Schedule of the Income Tax Act 1947.

To simplify capital allowance claims under Section 19, the prescribed working life of assets in the Sixth Schedule has been streamlined to 6, 12 and 16 years:

If the prescribed working life of the asset in the Sixth Schedule is 12 years or less, your company may make an irrevocable election to claim capital allowances over either 6 or 12 yearsIf the prescribed working life of the asset in the Sixth Schedule is 16 years, your company may make an irrevocable election to claim capital allowances over 6, 12 or 16 years

The above change applies to assets acquired in the basis periods relating to YA 2023 and subsequent YAs. It also applies to assets acquired in the basis periods relating to YA 2022 and prior YAs, if your company had deferred and is yet to start its capital allowance claims for the assets.

Your company must make the irrevocable election for the number of years of working life for the asset at the time of its tax filing for the YA relating to the basis period in which the asset is acquired. For assets acquired in basis periods prior to the basis period for YA 2023, your company must 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 assets purchased with cash:

In the first YA relating to the year in which the fixed asset is purchased:

IA = 20% x the cost of assetAA = (80% x the cost of asset)/ number of years of working life*

In the second and subsequent YAs:

IA is not applicableAA = (80% x the cost of asset)/ number of years of working life* (same as the first YA)For assets 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 applicableAA = (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 1947 (e.g. the working life for motor vehicle is 6 years).

Summary of the Different Methods to Claim Capital Allowances How to Calculate Qualifying Assets Initial Allowance (IA)/ Annual Allowance (AA) Over working life of asset[Section 19] Applies to all qualifying assetsRefer to Sixth Schedule of the Income Tax Act 1947 for working lifeFrom YA 2023, option to claim:6 or 12 years for prescribed working life of 12 years or less6, 12 or 16 years for prescribed working life of 16 years IA = 20% of cost AA = (80% of cost)/ No. of years of working life 3-year write-off[Section 19A(1)] Applies to all qualifying assets AA = 1/3 of cost 2-year write-off[Section 19A(1E)] Applies to all qualifying assets acquired during the basis periods relating to YAs 2021, 2022 and 2024YA 2021 or YA 2022 or YA 2024AA = 75% of cost YA 2022 or YA 2023 or YA 2025AA = 25% of cost 1-year write-off (for specific assets)[Section 19A(2)] ComputersPrescribed automation equipment listed in Income Tax (Automation Equipment) Rules 2004; and Amendment Rules 2010 (effective from 15 Dec 2010) AA = 100% of cost 1-year write-off (only for low-value assets)[Section 19A(10A)] Cost of each low-value asset not more than $5,000Total claim for 1-year write-off of all such assets capped at $30,000 per YAAA = 100% of cost

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