Income Tax - Capital Allowances Flashcards Preview

Taxation F6 by Areen > Income Tax - Capital Allowances > Flashcards

Flashcards in Income Tax - Capital Allowances Deck (10)
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1
Q

What is capital allowances?

A

Capital allowances in the expenditure on plant and equipment.

2
Q

What are the main 4 allowances covered in this chapter?

A

Here are the main allowances.

  1. WDA (written down allowance)
  2. AIA (annual investment allowance)
  3. FYA (first year allowance)
  4. Small pool WDA
3
Q

Two rates of WDA?

A

18% for main pool and 8% for special-rate pool items.

4
Q

What is AIA used for and what is the limit for AIA 100% for 12 annually?

Not applicable for?

A

$200,000 annually for expenditure on plan and machinery and is not applicable for cars.

5
Q

What is FYA and the limit for it?

Is it time apportioned?

A

It is a 100% exemption for low emission cars with CO2 emissions below 75g. There is no time apportionment for this allowance.

6
Q

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?

A

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).

7
Q

What is included in the special rate pool?

A

Here are the things

  1. Long life assets (25 years or more with $100,000 at least)
  2. Integral features of a building (escalators, cold water systems, heating systems)
  3. Thermal Insulation of a building
  4. Motor cars with Co2 emissions above 130g.
8
Q

What are Non-pool assets?

A
  1. Is it for cars privately used by owners

2. Short-life asset which has been elected to de-pool.

9
Q

Running balance charge?

A

It is when disposal exceeds the balance on the pool. This should be taken to the trading profit and loss.

10
Q

Final period of accounting. What happens in capital allowances?

A

No FYA, AIA or WDA will be available.