Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi all! We have been experiencing an issue on site where threads have been missing the latest postings. The platform host Vanilla are working on this issue. A workaround that has been used by some is to navigate back from 1 to 10+ pages to re-sync the thread and this will then show the latest posts. Thanks, Mike.
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

Help! Capital Allowances

  • 11-03-2010 4:12pm
    #1
    akila
    Registered Users Posts: 41 ✭


    Hi All

    Trying to do an assignment & I'm confused on the Capital Allowance end of it.
    If the machine cost 240k, the tax rate is 20% and my capital allowance is 25% per annum over the 4 year life...

    So....... Is my annual capital allowance 12k (being 20% of 240k divided over the 4 years) or is it 60k (being 240k divided over the 4 years)...

    Any help would be much appreciated :-)


Comments

  • #2
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    Capital Allowance is a fancy name for the wear and tear or the tax write down. It's is depreciation of the assets value.

    For example you buy a new car, by the end of the year it is going to be worth less and a capital allowance is the name we give to this write down in value.

    It does not have anything to do with the tax rate.

    So if your capital allowance is 25% then the write down is 25% every year.

    i.e

    Year one- new value 100K Capital Allowance 25
    Year two- asset value 75K Capital Allowance 25
    Year three asset value 50K Capital Allowance 25
    Year 4 asset value 25K Capital Allowance 25

    Year 5 Asset value Nil.

    That's the way it works. If you sell the asset in year 5 for a profit, the capital allowances are adjusted by what is know as a balancing charge.

    Hope that's clear. It's more important that you understand how it works.

    So- in your example which one do you think it is now?


Advertisement