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Capital Allowance for R & D

In: Other Topics

Submitted By Ireen
Words 562
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2. The Malaysian government has targeted the country to become a high income economy by 2020 or earlier. To ensure the successful achievement of this target there has to be structural changes in terms of skills, manpower, types of industries to be promoted (high-tech instead of low level production), Research & Development etc. tax incentives had been one of the methods used to encourage this growth and development.
You have been asked to give your views with respect to incentives that are currently available (in terms of capital allowances) and those that can be introduced to developed highly skilled manpower to cater to the needs of both the services and the manufacturing sector.

Research and Development(R&D) is an advancing technology,diversifying a product line and growing a business.R&D enables businesses to develop new processes and products.R&D Tax Credits allow businesses for reduction of tax for qualified expenditures.Business can claim tax credits up to 3 years and defer taking credit for up to 20 years.R&D tax credits not only rewarded for the final product,but all the changes,differences and experiment involving the final result.Capital allowances are atax relief available to a tax payer who incurs on certain expenditure within a commercial property,regardless of age,requirement or interest held.Capital allowances reduce the amount of tax paid.To trade and to demonstrate ownership the taxpayer must be using the qualifying assets.

Qualifying expenditure on plant and machinery will be the apparatus used for carrying on business is “plant” and a mere part of the used for carrying on the business is not “plant” therefore it is not eligible for a tax relief.Munby v Furlong [(1977) 50 STC 72],that books are indeed”plant”,hence qualifying for capital allowances.In this case,a solicitor bought books for his law library soon after he set up practice.He

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