CAPITAL ALLOWANCES AND CHARGES (Meaning of 'Disposal' (Disposal of…
CAPITAL ALLOWANCES AND CHARGES
Hire purchase transaction (Para 46)
A person incurs capital expenditure under a hire purchase agreement on the provision of plant and machinery for business purposes shall be deemed to be the owner of that machinery or plant.
Qualifying expenditure for motor vehicles [Para 2 (2)]
Blocked input tax
Restricted to RM50 000
After commencement of business
Before commencement of business (Para 55)
Change of basis period
Temporary disuse (Para 56 and 57)
If during a period of disuse is constantly maintained in readiness to be brought back into use.
The period of disuse is temporary
Used for the purposes of business immediately before disuse
Arise when a qualifying asset is disposed for a consideration.
Meaning of 'Disposal'
Disposal of motor vehicles
Disposal with other assets (Para 53)
Disposal by way of insurance compensation/ recoveries -Proviso Para 62 (1)
Sale proceeds not recovered
General principle (Para 61, Sch 3)
Assets owned < 2 years (Para 71)
Tax authorities would clawback all capital allowance given by way of balancing charge in the year of disposal.
Dual purpose case
Plant & machinery used partly(business & personal)
Unutilised capital allowances available for carry forward
Used plant & machinery (Para 2A,2B,2C)
A claim of the capital allowances had to be made for each YA upon the submission of return of income.
Replacement asset (Para 61B)
Old asset is replaced by new asset.
Assets held for sale (Para 61A)
Qualifying capital expenditure classified as asset held for sale, it shall be deemed cease to be used in that YA.
GST adjustment (Para 67)
Any GST adjustment related to input tax, shall be made at the end of the period of adjustment.