Income Tax - Capital Allowances Flashcards
What is capital allowances?
Capital allowances in the expenditure on plant and equipment.
What are the main 4 allowances covered in this chapter?
Here are the main allowances.
- WDA (written down allowance)
- AIA (annual investment allowance)
- FYA (first year allowance)
- Small pool WDA
Two rates of WDA?
18% for main pool and 8% for special-rate pool items.
What is AIA used for and what is the limit for AIA 100% for 12 annually?
Not applicable for?
$200,000 annually for expenditure on plan and machinery and is not applicable for cars.
What is FYA and the limit for it?
Is it time apportioned?
It is a 100% exemption for low emission cars with CO2 emissions below 75g. There is no time apportionment for this allowance.
Motor cars what are the allowances for Co2 75g and below, Co2 between 75-130g and above 130g.
Also, is there a de-pooling option for cars?
FYA for all cars below 75g Co2 emission.
WDA of 18% on cars between 75g-130g Co2 emission.
WDA of 8% for special rate pool cars which is above 130g emission.
Yes, cars should be de-pooled if the owner uses it for private use. The full allowances are used BUT, only the business use of the asset can be transferred to CA (capital assets).
What is included in the special rate pool?
Here are the things
- Long life assets (25 years or more with $100,000 at least)
- Integral features of a building (escalators, cold water systems, heating systems)
- Thermal Insulation of a building
- Motor cars with Co2 emissions above 130g.
What are Non-pool assets?
- Is it for cars privately used by owners
2. Short-life asset which has been elected to de-pool.
Running balance charge?
It is when disposal exceeds the balance on the pool. This should be taken to the trading profit and loss.
Final period of accounting. What happens in capital allowances?
No FYA, AIA or WDA will be available.
