Capital Allowance in MALAYSIA

Capital Allowance : General

In determining the business adjusted income during the basis period, no deductions are allowed for expenditures which are capital in nature or depreciation value for the assets which are used in the production of that business income. However, Schedule 3 of the Income Tax Act 1967 has laid down several allowable deductions in the form of allowances, for the capital expenditures that have been incurred.

Capital allowance is only given to business activity. The person who has the right to claim capital allowance is the person who has expended on the purchase or acquisition of the said asset. Examples of assets that are used in business are motor vehicles, machines, office equipments, furniture, etc.

Claims for capital allowance can be made in the relevant column provided in the Return Form.

Capital Allowance : Type and Rate

Type Of Asset	Initial Allowance (%)	Annual Allowance (%)
Heavy Machinery / Motor Vehicle	20	20
Plant and Machinery	20	14
Computer and ICT Equipment	20	40
Others	20	10

Notes :

1. Heavy Machinery - Bulldozers, cranes, ditchers, excavators, graders, loaders, rippers, rollers, rooters, scrappers, shovels, tractors, vibrator wagons and so on.
   
   
2. Motor Vehicles - All types of motorized vehicles such as motorcycles, aeroplanes, ships and so forth.
   
   
3. Plant and Machinery - General plant and machinery not included under heavy machinery such as air conditioners, compressors, lifts, laboratory and medical equipment, ovens and so forth.
   
   
4. Others - Office equipment, furniture and fittings.
   
   
5. In the case of motor vehicles, other than a motor vehicle licensed by the appropriate authority for commercial transportation of goods or passengers, the qualifying plant expenditure incurred shall be limited to a maximum of RM50,000 only.
   
   Motor vehicles which are licensed for commercial transportation of goods or passengers such as lorry, truck, bus, mini bus, van, etc, are not included in those restrictions.
   Nevertheless, starting from year of assessment 2001, the limitation amount for qualifying plant expenditure for motor vehicle, other than a motor vehicle licensed by the appropriate authority for commercial transportation of goods or passengers, which is bought on or after 28/10/2000, has been increased from RM50,000 to RM100,000 on condition :-
   

   1. The motor vehicle bought is a new motor vehicle, and
      
   2. The on the road purchase price does not exceed RM150,000.