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104
B6 CAPITAL ALLOWANCES
A1. Standard rates
With effect from Y/A 2000 (cyb), capital allowances will be re-categorised into three classes and the rates of
capital allowances are revised as follows:
Type of Asset Initial Allowance
Rate
Annual
Allowance Rate
Heavy machinery and motor vehicles 20% 20%
Plant and machinery (general) 20% 14%
Others 20% 10%
Assets with a life span of not exceeding 2 years Replacement
basis
Accelerated capital allowances (ACA) be given to ALL qualifying
plant expenditure under Sch 3 of the Income Tax Act 1967 (ITA
1967) incurred between the period of 10 Mar 2009 to 31 Dec
2010. This ACA does not apply to a person who has been granted
incentives under the Promotion of Investments Act (PIA) 1986;
reinvestment allowance; exemption under S. 127(3)(b) or S.
127(3A) of the ITA 1967; or who qualifies for an allowance at a
higher rate under the ITA 1967 or Rules [PU(A) 111/2009].
20% 40%



Initial Allowance Annual
Allowance
Buses using natural gas in business of public transportation and
natural gas refuelling equipment in a natural gas refuelling outlet
[PU(A) 265/1997].
40% 20%
Imported prescribed heavy machinery used in construction,
mining, plantation and timber industries [PU(A) 474/1997].
10% 10%
Machinery and plant (other than imported heavy machinery) used
in specific industries [PU(A) 294/1998]:
Building and construction
Timber
Tin mining
unless election made in writing.


30%
60%
60%
20%


20% / 14%*
20% / 14%*
20% / 14%*
20% / 14%*
* See section A1 above.

A1. CURRENT CAPITAL ALLOWANCES RATES FOR PLANT
A2. SPECIAL RATES FOR PLANT
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Initial Allowance Annual
Allowance
Prescribed equipment and facility for collecting wastes, limiting
pollution of the environment, checking excessive pollution and
securing more efficient use of the equipment [PU(A) 295/1998].
40% 20%
Plant and machinery used for recycling of wastes or for further
processing of wastes into finished products. This accelerated capital
allowance (ACA) does not apply to a company which is granted
incentives under PIA 1986 (except for deductions for promotion of
exports), or granted reinvestment allowance [PU(A) 505/2000].
40% 20%
Plant and machinery used for the purpose of a qualifying project in
respect of a promoted activity. This ACA does not apply to a
company which is granted reinvestment allowance, pioneer status
or investment tax allowance, or where it fails to submit a
confirmation letter from the Malaysian Investment Development
Authority (MIDA) concerning the activity or products [PU(A)
506/2000].
40% 20%
ACA on the purchase of pre-cast concrete mould used in the
production of industrialised building system component [PU(A)
249/2006].
40% 20%
Qualifying expenditure on private motor vehicles restricted to:

RM50,000 20% 20%

RM100,000 applies only to new vehicle with total cost not
exceeding RM150,000 purchased on or after 28 Oct 2000
20% 20%
ACA on machinery and equipment used in the agricultural sector
including plantations:

Equipment eligible for ACA shall be determined by the Minister of
Finance [PU(A)188/2005].
20% 40%
ACA be given to small value assets not exceeding RM1,000 each
but not exceeding a total value of RM10,000. (The maximum limit of
RM10,000 is not applicable to small and medium enterprises
(SMEs) with effect from Y/A 2009.)
[Note: Taxpayers are given the option to either claim the ACA
(100%) or the normal CA.]
100%
ACA be given to:
(i) security control equipment [other than the Global Positioning
System (GPS)] for a factory where the company is approved
under the Industrial Co-ordination Act 1975 (Act 156); or


20%


80%

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Initial Allowance Annual
Allowance
(ii) any GPS for vehicle tracking for a container lorry of company
bearing Carrier Licence A and for a cargo lorry of the company
bearing Carrier Licence A or C issued under the Commercial
Vehicles Licensing Board Act 1987 (Act 334).
20% 80%
(Note: The rules are effective from Y/A 2009 to 2012.)
New rules have extended ACA to Y/A 2015 and it is enhanced to
include:
(a) companies that install security control and surveillance
equipment in residential areas; and
(b) safety mirrors and panic buttons [PU(A) 4/2013].


ACA be given to new buses used in the business of a bus operator.
The bus shall be used for commercial transportation of passengers
or conveyance of tourists; locally assembled or constructed, as
defined in Motor Vehicles (Registration and Licensing) Rules 1959;
and not a reconditioned bus. Bus specified in the Gazette Order are
stage bus, charter bus, express bus, mini bus, employees bus,
feeder bus, school bus and excursion bus [PU(A) 356/2008].
(Note: The rules are effective from Y/A 2009 to 2011.)
20% 80%
SMEs be given ACA on ALL expenses incurred on plant and
machinery that qualify for Sch 3 capital allowances. This ACA does
not apply to a company which has been granted incentives under
the PIA 1986; reinvestment allowance; or who qualified for an
allowance under Para 19A of Sch 3 of the Act [PU(A) 357/2008].
(Note: The rules are effective from Y/A 2009 to 2010.)
20% 80%
ACA be given to information and communication technology (ICT)
equipment including computer and software. This ACA does not
apply to a company which has been granted incentives under the
PIA 1986; or reinvestment allowance [PU(A) 358/2008].
(Note: The rules are effective from Y/A 2009 to 2013.)
Budget 2014 has extended ACA to Y/A 2016.
20% 80%
ACA be given to expenses incurred on renovation or refurbishment
of business premises between 10 Mar 2009 to 31 Dec 2010 which
are prescribed by the Ministry of Finance. However, the amount of
qualifying expenditure is restricted to RM100,000 for two years of
assessment.
50%
ACA be given for equipment certified by the Ministry of Energy,
Water and Communications and used exclusively to control the
quality of electric power. This ACA does not apply to a company
which has been granted incentives under the PIA 1986 (except for
deduction for promotion of exports); or reinvestment allowance
[PU(A) 87/2005].
20% 40%
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Initial Allowance Annual
Allowance
ACA to be given to a Tun Razak Exchange Marquee status
company in respect of renovation costs incurred on a building
located in the Tun Razak Exchange (Note: The rules are effective
from 1 January 2014 until 31 Dec 2020) [PU(A) 29/2013].
20% 40%
ACA be given on qualifying plant expenditure incurred for the
purpose of carrying out petroleum operations in a marginal field.
The Rules do not apply to a person who has been granted
investment allowance, operates in a Joint Development Area,
operates in an area under a Government to Government agreement
for joint exploration or the plant is used in both marginal and non-
marginal fields. The Rules come into operation on 30 Nov 2010 and
are effective from Y/A 2010 until Y/A 2024 [PU(A)119/2013].
25% 15%


Types of buildings IA AA
Industrial buildings (standard rate unless special rates apply). 10% 3%
Building constructed and provided as living accommodation for individuals
employed in a business where an industrial building is in use and excludes
a director, an individual having control or an administrative staff.
Capital expenditure on public roads and ancillary structures recoverable
through toll collection.


40%

10%


3%

6%
Building (constructed or purchased) for the provision of child care facilities
(1 Jan 1994 onwards).

0

10%
Building (constructed or purchased) used for providing living
accommodation to employees by a person engaged in a:

Manufacturing business (1 Jan 1994 onwards) 0 10%
Hotel or tourism business or approved service project (Y/A 1997
onwards).

0

10%
Building (constructed or purchased) used for a school or an educational
institution approved by the Minister of Education or any relevant authority or
for the purposes of industrial, technical or vocational training approved by
the Minister (Y/A 1996 onwards).



0



10%
Building (constructed or purchased) used as warehouse for the storage of
goods, for export or for the storage of imported goods to be processed and
distributed or re-exported (Y/A 1998 onwards).


0


10%
Building constructed pursuant to an agreement entered into with the
Government on a build-lease-transfer basis on lease to the Government
(Y/A 2000 (pyb) onwards).



10%


6%
B. CAPITAL ALLOWANCES RATES FOR BUILDINGS
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Types of buildings IA AA
Building (constructed or purchased) used as an old folks care centre
approved by Social Welfare Department (21 Sep 2002 onwards) [PU(A)
143/2003].

0

10%
Building (constructed or purchased) used by a BioNexus status company
solely for its new business or expansion project (2 Sep 2006 onwards)
[PU(A) 374/2007].

0

10%
Building (constructed or purchased) in a Cyberjaya Flagship Zone used by
a MSC status company or rented to a MSC status company (Y/A 2006
onwards) [PU(A) 202/2006].


0


10%
Building constructed under a privatisation project and private financing
initiatives approved by the relevant authorities (Y/A 2009 onwards) [PU(A)
119/2010].

10%

6%
Building (constructed or purchased) used for the purpose of a kindergarten
approved by the Ministry of Education (Y/A 2013 onwards) [PU(A) 1/2013]

0

10%
Building (constructed or purchased) used for the purpose of a child care
centre registered with the Department of Social Welfare (Y/A 2013
onwards) [PU(A) 2/2013].

0

10%
A commercial building (constructed or purchased) used for the purpose of a
specified business by a Tun Razak Exchange Marquee status company in
the Tun Razak Exchange (Effective Y/A 2014 for qualifying building
expenditure incurred on or before 31 Dec 2020) [PU(A) 27/2013].


0


10%


Rate (Fraction of
Expenditure Incurred)
Capital expenditure incurred on:
(a) the clearing and preparation of land for the purposes of agriculture 1/2
(b) the planting (but not replanting) of crops on land cleared for planting 1/2
(c) the construction on a farm of a road or bridge 1/2
(d) building for the welfare of persons or as living accommodation for a
person employed for the working of a farm
1/5
(e) any other building. 1/10

C. AGRICULTURE ALLOWANCES RATES
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Rate (fraction of
expenditure incurred)
Capital expenditure incurred on the construction in a forest of:

(a) a road or building used for the purposes of a business which consists
wholly or partly of the extraction of timber from the forest
1/10
(b) a building provided for the welfare of persons, or as living accommodation
for a person, employed for such extraction of timber.
1/5


Date issued
This Guidelines clarify the non-application paragraphs in the following rules:
Income Tax (Accelerated Capital Allowance) (Plant and Machinery) Rules
2008 [PU(A) 357/2008];
Income Tax (Accelerated Capital Allowance) (Information and
Communication Technology Equipment) Rules 2008 [PU(A) 358/2008]; and
Income Tax (Accelerated Capital Allowance) (Plant and Machinery) Rules
2009 [PU(A) 111/2009].
9 August 2012
Tax treatment:
(a) The eligibility of incentives under the PIA 1986, re-investment allowance
under Sch 7A of the ITA 1967 or exemption under Para 127(3)(b) or
127(3A) of the ITA 1967 is by reference to a person. If the person decides
to claim an incentive under PIA or reinvestment allowance or exemption
under Para 127(3)(b) or Para 127(3A), then the person is not eligible for
ACA. Only normal capital allowance rates can be claimed on the assets.

(b) The ACA rules are not mutually exclusive with deductions that are
determined by the Minister under S. 154 of the ITA 1967. A person who
qualifies for a special deduction or double deduction approved by the
Minister under S. 154 is still eligible for ACA.

(c) A person who has claimed capital allowance under Para 19A of Sch 3 of
the ITA 1967 (100% for assets valued not more than RM1,000 per asset
and subject to a maximum of RM10,000 but the limit is not applicable to a
SME company) is still eligible for ACA as the allowance is by reference to
an asset and not on a person.

(d) If an asset is eligible for a higher rate of initial allowance or annual
allowance under any rules, the person cannot claim a lower rate that is
provided for in one of the rules for the same asset.

D. FOREST ALLOWANCES RATES
E. GUIDELINES FOR NON-APPLICATION OF ACCELERATED CAPITAL
ALLOWANCES
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110
Date issued
(e) Para 71, Sch 3 of the ITA 1967 applies to all assets including assets for
which ACA is claimed if the disposal of the asset is made within two years
from the date of acquisition. A balancing charge equal to the total
allowances given is made except in the case of death of the owner of the
asset or, with effect from Y/A 2009, other reasons acceptable to the
Director General of Inland Revenue Malaysia.

(f) In the case of a controlled transfer within 2 years, Para 71, Sch 3 of the
ITA 1967 would be applicable and be subject to balancing charge. The
recipient of the asset can claim capital allowance at normal rates based on
the qualifying expenditure incurred. If no payment is made by the recipient,
no capital allowance can be claimed.

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