Capital Allowance
In determining the business adjusted income during the
basis period, no deductions are allowed for expenditures
which are capital in nature or depreciation value for the
assets which are used in the production of that business
income. However, Schedule 3 of the Income Tax Act 1967 has
laid down several allowable deductions in the form of
allowances, for the capital expenditures that have been
incurred.
Capital allowance is only given to business activity. The
person who has the right to claim capital allowance is the
person who has expended on the purchase or acquisition of
the said asset. Examples of assets that are used in business
are motor vehicles, machines, office equipments, furniture,
etc.
Claims for capital allowance can be made in the relevant
column provided in the Return Form.
Capital Allowance : Type and Rate
| Type of Asset | Initial Allowance (%) | Annual Allowance (%) |
|---|---|---|
| Heavy Machinery / Motor Vehicle | 20 | 20 |
| Plant and Machinery | 20 | 14 |
| Computer and ICT Equipment | 20 | 40 |
| Others | 20 | 10 |
Notes:
1. Heavy Machinery - Bulldozers, cranes, ditchers, excavators, graders,
loaders, rippers, rollers, rooters, scrappers, shovels, tractors, vibrator
wagons and so on.
2. Motor Vehicles - All types of motorized vehicles such as motorcycles,
aeroplanes, ships and so forth.
3. Plant and Machinery - General plant and machinery not included under
heavy machinery such as air conditioners, compressors, lifts, laboratory and
medical equipment, ovens and so forth.
4. Others - Office equipment, furniture and fittings.
5. In the case of motor vehicles, other than a motor vehicle licensed by the
appropriate authority for commercial transportation of goods or passengers,
the qualifying plant expenditure incurred shall be limited to a maximum of
RM50,000 only.
Motor vehicles which are licensed for commercial transportation of goods or
passengers such as lorry, truck, bus, mini bus, van, etc, are not included
in those restrictions. Nevertheless, starting from year of assessment 2001,
the limitation amount for qualifying plant expenditure for motor vehicle,
other than a motor vehicle licensed by the appropriate authority for
commercial transportation of goods or passengers, which is bought on or
after 28/10/2000, has been increased from RM50,000 to RM100,000 on condition
:-
i. The motor vehicle bought is a new motor vehicle, and
ii. The on the road purchase price does not exceed RM150,000.
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