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Hello everyone:
There is a question confused me: as we calculate the capital allowance in the last project year, when the balance allowance or charge should be claimed? I saw the answer said “no allowance claimable in the last year as after-tax realisable valuve give” why?
Thanks.
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I did not not see the question you want solved. All the same, in case you do not understand what those words mean, Balancing allowance is allowed for tax at corporation tax rate where upon scraping the company’s asset on which capital allowance had been claimed and its less than the the written down value. i.e wdv>disposal proceeds then the diff. allowed for tax @ tax rate. the exact opposite is balancing charges
Thanks for your explaining,Sephfem
So as you said, the capital allowance is always claimable if wdv>disposal proceeds, and balance charges if wdv
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i will review the question and get back to you. u would have made my work easier by telling me the question number and perhaps page
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Shaojia,
The tax claimable on account of balancing allowance or payable on account of balancing charge has been already adjusted with the yr 5 realisable value. So it is not to be considered in the CA calculations.
This is what I understood.
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in the sleepon question only 250,000 of the 400,000 cost of the project is to be subjected to capital allowance computation at 25%reducing balance over 4 years so at the end of the 4 yrs wdv will be nil, as such there will neither be balancing charges nor allowance. the after tax realisable value relate to the part of the project cost not subject to capital allowance computation. besides its been valued after tax and has nothing to do with balancing charges or allowance. I do hope u find dis view invaluable
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