Individual income tax: Capital allowance rates

Basically, no deductions are allowed for expenditures which are capital in nature or depreciation value for the assets in determining the business adjusted taxable income of an individual. However, there are several allowable deductions (as stipulated in Schedule 3 of the Income Tax Act 1967) in the form of allowances, for the capital expenditures that have been incurred.

Capital allowance (elaun modal) is only given to business activity, and only to the person who has expended on the purchase or acquisition (i.e. the owner) of the said asset. Examples of assets that are used in business are machines, motor vehicles, office equipments, furniture, etc.

Claims for capital allowance can be made in the relevant column provided in the ITRF (Income Tax Return Form).

Capital allowance : Type and Rate

Type Of Asset	Initial Allowance (%)	Annual Allowance (%)
Heavy Machinery	20	20
Motor Vehicle	20	20 *
Plant and Machinery	20	14
Computer and ICT Equipment	20	40
Others	20	10

 

Notes :

1. Heavy Machinery - Bulldozers, cranes, ditchers, excavators, graders, loaders, rippers, rollers, rooters, scrappers, shovels, tractors, vibrator wagons and so on.
2. Motor Vehicles - All types of motorized vehicles such as motorcycles, airplanes, ships and so forth.
   
   * Restriction on maximum qualifying expenditure:

   Motor vehicle	Limit
   New vehicles bought on or after 28/10/2000 where on-the-road price is RM150,000 or less	RM100.000
   Vehicles other than the above	RM50,000

   
   Motor vehicles which are licensed for commercial transportation of goods or passengers such as lorry, truck, bus, mini bus, van etc. are not included in the restriction.
   
3. Plant and Machinery - General plant and machinery not included under heavy machinery such as air conditioners, compressors, lifts, laboratory and medical equipment, ovens and so forth.
4. Others - Office equipment, furniture and fittings.

Source: Inland Revenue Board (IRB) / Lembaga Hasil Dalam Negeri (LHDN) Malaysia.