Capital Allowances and Tax Implications

These flashcards cover key vocabulary and concepts related to capital allowances, movable and immovable assets, tax implications, and relevant sections of tax law.

Capital Allowances

Deductions for capital expenditure, allowing taxpayers to write off the cost of capital assets over a period.

Movable Assets

Assets that can be moved, such as machinery, equipment, and vehicles, used in the production or processing of income.

Immovable Assets

Assets that cannot be moved, such as buildings or land, which are used mainly for the production of income.

Wear and Tear

The reduction in the value of an asset due to usage or aging, impacting its depreciation for tax purposes.

Section 11(e)

A tax provision allowing deductions for the wear and tear on movable assets used for trade.

Section 13

A tax provision relating to capital allowances for immovable assets, such as manufacturing buildings.

Taxable Income

Income after exemptions, deductions, allowances, and losses have been accounted for, subject to normal tax.

Machinery and Plant

Definitions of physical assets used in manufacturing but not specifically defined in tax legislation.

Lease Premium

A payment made for the right to use or occupy leased assets, which must be deducted over the lease term.

Intellectual Property

Intangible assets such as patents, trademarks, and copyrights that must be used in the production of income.

Suspensive Sale Agreement

A sale agreement where ownership of the asset transfers to the buyer only after certain conditions are met.

Recoupment

The process of recovering previously claimed tax allowances when an asset is disposed of or sold.

Exempt Income

Income that is not subject to tax, being excluded from the gross income calculation.