Deductions/ Capital Allowances Summary/ Investment Deduction
Deductions After APRIL 2020
Tables
| Capital expenditure incurred on: | Rate of Investment Allowance |
|---|---|
| (a) Buildings — | . |
| (i)Hotel building | 50% in the first year of use |
| (ii)Building used for manufacture | 50% in the first year of use |
| (iii)Hospital buildings | 50% in the first year of use |
| (iv)Petroleum or gas storage facilities | 50% in the first year of use |
| (v)Residual value to item (a)(i) to (a)(iv) | 25% per year, on reducing balance |
| (vi)Educational buildings including student hostels | 10% per year, on reducing balance |
| (vii)Commercial building | 10% per year, on reducing balance |
| (b) Machinery — | . |
| (i)Machinery used for manufacture | 50% in the first year of use |
| (ii)Hospital equipment | 50% in the first year of use |
| (iii)Ships or aircrafts | 50% in the first year of use |
| (iv)Residual value items (b) (i) to (b)(iii) | 25% per year, on reducing balance |
| (v)Motor vehicles and heavy earth moving equipment | 25% per year, on reducing balance |
| (vi)Computer and peripheral computer hardware software, calculators, copiers and duplicating machines | 25% per year, on reducing balance |
| (vii)Furniture and fittings | 10% per year, on reducing balance |
| (viii) Tele communications equipment | 10% per year, on reducing balance |
| (ix) Filming equipment by a local film producer licensed by the Cabinet Secretary responsible for filming | 25% per year, on reducing balance |
| (x)Machinery used to undertake operations under a prospecting right | 50% in the first year of use and 25% per year, on reducing balance |
| (xi)Machinery used to undertake exploration operations under a mining right | 50% in the first year of use and 25 per year, on reducing balance |
| (xii) Other machinery | 10% per year, on reducing balance |
| - | -- |
| (c) Purchase or an acquisition of an indefeasible right to use fibre optic cable by a telecommunication operator | 10% per year, on reducing balance. |
| - | -- |
(d) Farmworks | 50% in the first year of use and 25% per year, on reducing balance. |
Deductions prior to 25APRIL 2020
CAPITAL EXPENDITURE ON CERTAIN BUILDINGS
Industrial building Allowance(IBD)
- Where the amount of the deduction has not been increased* = one-fortieth
- Where that amount has been so increased = fraction of increase.
- Paragraph 5(1)(c)=Hotels = one-twenty-fifth
- Paragraph 1(1)(a) .wef 1/1/2010 = 10%
- Paragraph 5(1)(c)=Hotels and 5(1)(e) =hostel/educational building. wef 01/01/2007 = one tenth
- Paragraph 5(1)(e)=hostel/educational building, wef 01/01/2007 = 50% (For film/actor = 100%)
- Paragraph 5(1) (f)=rental residential building, wef01/01/2008 = 5%
- Paragraph 5(1) (f)=rental residential building, wef01/01/2010 = 25%
NB:
- If used in part of year = Apportion.
- If sold for IBD use = Deduct appropriately.
- If deducted under P24,24A & 24B (Investment Deduction)= Reduce deduction
- If a trading receipt under P24A (manufacture under bond) = Reduce deduction
- Specific civil works on the premises of the building shall claim IBD*.
- Deduction of that year should not exceed residue of expenditure* (Def;P3(a to c)).
- Expansion/Renovation qualify for IBD.
- If life of IB is less than 40 years = IBD will increase a little. Ref:P1(1)(a)).
- Sale of Building prior to use = Actual expenditure/capital expenditure.
- IB means mill, tunnel, manufacturing, storage, ploughing, dwelling house, hotel, hostel, rentals,
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