7/24/2019 Example Capital Allowance

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Capital Allowances Example 1

Company purchased 20,000 machinery on 1 April 2013 with a useful economic life of 4

years and has taxable prots for the year to 31 !arch 2014 of 100,000" #he 20,000 will be

eli$ible for the annual in%estment allowance&

Capital allowances pool

Additions (machinery purchased 1March)

20,000

Annual Investment Allowance(20,000)

Balance carried orward nil

Tax computation

!a"a#le pro$ts 100,000

Add% &epreciation ',000

ess% Capital allowances(20,000)

*ro$ts char+ea#le to Corporation !a" ',000

Corporation !a" - 20. 1/,000

' (epreciation has been calculated by spreadin$ the purchase price o%er the useful

economic life )20,000 * 4 + ,000 per year-"

Capital Allowances Example 2

7/24/2019 Example Capital Allowance

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Company purchased machinery pre%iously which has a depreciation char$e of 1,000 per

year and has a capital allowance pool brou$ht forward of .,000&

Capital allowances pool

Balance #rou+ht orward ,000

ritin+ &own Allowance - 1. (1,00)

Balance carried orward ,320

Tax computation

!a"a#le pro$ts 100,000

Add% &epreciation 1',000

ess% Capital allowances (1,00)

*ro$ts char+ea#le to Corporation !a" 114,320

Corporation !a" - 20. 22,/

Capital Allowances Example 3

Company purchases machinery on 10 April 2012 for 110,000 with a useful economic life of

10 years"

Cost 110,000

Annual Investment Allowance (2',000)

Balance remainin+ carried orward ',000

ritin+ down allowance -1. (1',400)

Balance carried orward 3,/00