Capital allowances are granted at prescribed statutory rates, calculated as per reducing balance method under assets pooling system or straight-line method, on depreciable assets owned by the company and used for its business operations. Further, the asset needs to be in the business upto the end of the year for claiming capital allowance.
Depreciable assets are classified into five main asset classes (as given in the below table). Assets in classes 1-3 are placed in separate pools and capital allowances are calculated on the written down values of the relevant pools at the end of the tax year. Capital allowances on assets in classes 4 - 5 are calculated on individual assets of the same class.
The capital allowance rates applicable to assets are as below:
Capital allowance cannot be deferred.