Page 7 - RSM Budget 2021 Highlights

CORPORATIONS AND BUSINESSES

Acceleration of Capital Allowances Claim for Comments
Plant and Machinery  The extension of the option to accelerate the
write-off of the cost of acquiring P&M reaffirms
Current
the Government’s commitment to help
Taxpayers who incurred capital expenditure on the businesses cope with cash flow difficulties amid
acquisition of plant and machinery (“P&M”) in the the COVID-19 pandemic.
basis period for YA2021 (i.e. FY2020) were given an
irrevocable option to accelerate the write-off of the
cost of acquiring such P&M over two years.  This measure provides an immediate reduction
in tax expense outlay to profitable businesses
The rates of accelerated capital allowances allowed but will be of no consequence to those loss
were as follows: making businesses which are not in a taxable
position.

 75% of the cost incurred to be written off in first
year (i.e. in YA2021); and

 25% of the cost incurred to be written off in
second year (i.e. in YA2022).

The option above was in addition to the options
currently available under Sections 19 and 19A of the
ITA.

No deferment of capital allowances claims was
allowed under the above option. This meant that if a
taxpayer opted for the accelerated write-off option,
it would need to claim the capital expenditure
incurred for acquiring P&M based on the rates of 75%
in YA 2021 and 25% in YA 2022.

Proposed changes

To continue providing support to businesses, the
option to accelerate the write-off of the cost of
acquiring P&M will be extended to capital
expenditure incurred on the acquisition of P&M in the
basis period for YA2022 (i.e. FY2021), with the same
parameters.

Effective date
Acceleration of capital allowances claim is extended
to capital expenditure incurred on the acquisition of
P&M in YA2022 (i.e. FY2021).

6 | RSM