Capital allowance资本减免

- Capital allowance would lead to reduction in taxes, and also can be seen as a cash inflow;

- It can be used to reduce taxable profit;

- Saving in tax payments should be treated as a cash saving arising from the acceptance of the project;

- Usually, written down allowance on cost of plant and machinery at the rate of 25% on reducing balance method;

- When the asset is sold, the differences between the selling price and NBV at the time of sale would be a taxable profit(Balancing charge) or tax allowable loss(Balancing allowance);

- It can be assumed that full year’s allowance in the year of purchase and none in the year of disposal.