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Capital allowances for PCs

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  • 25-09-2006 11:13pm
    #1
    DamoRed
    Registered Users Posts: 394 ✭✭


    Can anyone tell me what the story is regarding capital allowances on computer equipment?

    I've been told that the rate is 12.5% per annum over the life of the equipment. But in all seriousness, everybody here knows that computers are not going to last 8 years. Most people in business will be looking to update their computer systems after about 3 years, some, even sooner.

    The 12.5% rate of depreciation is fine on large machinery costing a minimum of €5-10K, the likelihood is that they would be lasting around 5-6 years.

    But computer equipment, and for my own purposes, I mean one desktop system and a printer, costing €1200 and €2500 respectively. There should be a decent enough resale value for a printer, but practically nothing for the pc, yet I would only get 37.5% capital allowance for a system that is outdated and MUST be replaced.

    Am I missing something?


    Damo


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    #2
    leeroybrown
    Closed Accounts Posts: 7,563 ✭✭✭leeroybrown


    I'm reasonably sure you are right. It's at 12.5% like any other fitting, fixture, plant, etc. I think that computer software is even included in the same category.


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    #3
    Nuttzz
    Registered Users Posts: 3,774 ✭✭✭Nuttzz


    with those sorts of figures you can just write them off as overheads in the first year of purchase if you wish


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    #4
    ircoha
    Closed Accounts Posts: 2,290 ✭✭✭ircoha


    Nuttzz wrote:
    with those sorts of figures you can just write them off as overheads in the first year of purchase if you wish

    Agreed, expense them.

    Just on a point of detail.

    Depreciation is an accounting term which is the method used to try and match the cost of an asset against the associated production.

    12.5% may be a good rate.

    Depreciation is NOT an allowable expense for tax purposes.

    Capital Allowances are a tax concept, not an accounting concept and they are used to incentivise industry to buy capital goods for production purposes.

    In some cases u can write off the entire cost in year one against tax, this is called 100% capital allowances. Look at www.revenue.ie


    HTH


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