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Reinvestment allowance - Coggle Diagram
Reinvestment allowance
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Plant and machinery
They must be used in the factory, outside is not eligible
Capital expenditure used by the management, director and admin is not eligible
QFE
Factory
Building or extension of it, used to
Place or install plant or machinery where the manufacturing activity was carried out, or
Store raw material or good or materials manufactured prior to sale. The storage area shall not exceed 10% of the total area of the building or extension of it
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Qualifying project
Expanding, modernising or automating its existing business in respect of the manufacturing of a product or any related product within the same industry
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Manufacturing
Excludes
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Simple activity which does not use the special skills, special machines, special apparatus or special equipment
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Withdrawal of RA
If the asset for which the allowance is given is disposed of within five years of the date of acquisition of the asset
Computation of RA
The allowance is 60% of the QCE, but is up to 70% of SI from business source
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If a company also carries on distribution of own product or other supplier's products, then apportionment to arrive at the adjusted income of the manufacturing activity can be based on the cost of sales basis
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Unabsorbed RA
After the 15 consecutive years end, then another 7 years allowed for carry forward purpose. Any balance after the 7 years which are unutilised will be disregarded
Controlled sales
If the disposer has claimed for RA, then the acquirer cannot claim RA anymore
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