ABSTRACT
Capital allowances provide tax relief by prescribing a statutory rate of depreciation for tax purposes in place of that used for accounting purposes. They are utilized by government to provide an incentive to invest in capital equipment, including assets within commercial property, by allowing taxpayers a deduction from taxable profits for certain types of capital expenditure, thereby reducing, or deferring, tax liabilities. The capital allowances most commonly applicable to real estate are those given for plant and machinery in all buildings, other than residential dwellings, except for common areas and Structures and Buildings Allowances for the residual construction spend on non-residential property. Enterprise Zone Allowances are also available for capital expenditure within designated areas only where there is a focus on high value manufacturing. Capital Allowances on special rate pool plant and machinery are currently given in the form of writing down allowances at the current rate of 6% per annum on a reducing balance basis.
