Understanding Capital Allowance in Malaysia

What is the main type of capital allowance under the Income Tax Act 1967?

• Investment Allowance

• Initial Allowance

• Depreciation Allowance

• Capital Gains Allowance

Which of the following is considered qualifying expenditure for capital allowance?

• Costs of purchasing fixed assets for business use.

• Expenses for office supplies

• Costs of employee salaries

• Payments for utility bills

What is the purpose of capital allowance in income tax?

• To eliminate all forms of taxation on capital investments.

• To provide tax credits for personal expenses.

• The purpose of capital allowance in income tax is to reduce taxable income by allowing deductions for capital expenditures.

• To increase taxable income by adding capital gains.

How often can a business claim capital allowance?

• Only once, at the end of the business lifecycle.

• Every quarter, during financial audits.

• Monthly, as part of regular expense reports.

• Annually, during tax returns.

Which type of asset qualifies for initial allowance?

• Personal assets like jewelry and art.

• Inventory held for resale in a store.

• Land that is not used for business operations.

• Capital assets used in a business, such as machinery and equipment.

What is the maximum percentage for annual allowance on machinery?

• 20%

• 10%

• 14%

• 40%

Can a business claim capital allowance on improvements made to an existing asset?

• Improvements cannot be claimed if the asset is over 10 years old.

• Yes, a business can claim capital allowance on improvements made to an existing asset.

• No, only new assets qualify for capital allowance.

• Capital allowance can only be claimed on assets purchased, not improved.

Which of the following is NOT a type of capital allowance?

• Depreciation expense

• Tax credit

• Operating expense

• Investment allowance