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In the notes, page 28, Example 1. Why haven’t they deducted AIA in this question and Example 2 and 3 have.
I am really confused on when I can and can not deduct AIA.
Someone please explain.
Thank you
Maybe it’s because they haven’t got round to explaining what the AIA is until just after example 1? In any case, it’s not compulsory to use the AIA.
By the way, am I correct in saying that the industrial building allowance does not apply to 1012 exams?
Thanks for coming back to me. I thought that might have been the case but its best to double check on this things.
Ummm I am using Dec 2011 notes as OT haven’t uploaded the June 2012 notes yet so I am not sure about the industrial building allowance but the tutor did say that it will only be for December 2011 sitting. So you might be right but will have to wait and see.
HI
As per syllabus of F6. industribl Buiding Allowance (IBA) is excluded from the syllabus.
AIA is not necessary to claim, However any asset going to special rate pool should be given first preference.
Hope its helps
Raj“any asset going to special rate pool should be given first preference”
Would I be right in saying that there isn’t a legal obligation to give first preference to special rate items? It’s just that, because they only qualify for 10% allowances per year, their benefit is not so great, so it is for cost effective reasons?
You are correct. its just that we would get benefit over the year with just a small benefit of 10%. As such from a tax planning perspective. it would be better to allocate special rate items to be included first in AIA.
Please note there is no legal obligation to allocate special rate pool items to AIA.
In Real world its just depend on What company prefers.
Hope its helps
RajAnother thing that occurred to me is, in the case of a sole trader, there’s no point in using up too much AIA, to the extent that it uses up any of the personal allowance. But after using up however much you want to use in the AIA, the remainder is presumably put into the main pool, and an additional 20% used as capital allowance in the same year. How do you calculate how much to use as AIA, in order to be left with a figure equal to your personal allowance?
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