Page 9 - RSM Budget 2020 Highlights

CORPORATIONS AND BUSINESSES

Working Life of Plant and Machinery for Capital Comments
Allowances Claim Purposes  As the proposed changes are in addition to the
Current currently available accelerated capital
allowances claim under Section 19A, the election
The Sixth Schedule specifies the number of years of which businesses could now made under
working life (“prescribed working life”) of P&M for Section 19 provides an added choice for better
the purpose of computing annual allowances for such business planning.
P&M under Section 19 of the ITA.

Depending on the P&M, businesses may claim annual  An accelerated annual allowances claim under
allowances on their P&M over 5, 6, 8, 10, 12, or 16 Section 19 of the ITA for P&M, if opted for,
years. means a reduction in tax payable for businesses
for the respective years in question.
Proposed changes

To simplify capital allowances claims under Section 19
of the ITA, the prescribed working life of P&M in the
Sixth Schedule will be streamlined. Businesses
claiming annual allowance under Section 19 of the ITA
may make an irrevocable election to write down their
P&M as follows:
 If the current prescribed working life of the P&M
in the Sixth Schedule is 12 years or less,
businesses may choose to claim annual
allowance over 6 or 12 years; or
 If the current prescribed working life of the P&M
in the Sixth Schedule is 16 years, businesses
may choose to claim annual allowance over 6, 12
or 16 years.

The above will apply for P&M acquired in or after FY
2022, and in cases where P&M were purchased prior
to FY 2022 and no claim for capital allowances (both
initial and annual allowances) has been made (i.e. the
claim for capital allowances in respect of the entire
cost of the P&M has been deferred).

Effective date
For P&M acquired in or after FY 2022.

May include those P&M acquired prior to FY 2022
where no initial and annual allowances have yet been
made in respect of the entire cost of the asset.

BUDGET 2020 HIGHLIGHTS | 7