PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations

Explains the tax treatment of repairs and renovations for businesses.

Question

Question:
Repairs are essential for maintaining the safety of a property, and renovation improves the overall functionality of a property.

Required:
What is the tax treatment of repairs and renovations?

Answer

Deduction allowed in respect of an expense for repair or improvement of a particular asset shall not exceed 5% of the written-down value of the applicable pool of that depreciable asset held at the end of the year.

The excess of the expense after deduction is added to the depreciable basis of the applicable pool for the calculation of capital allowance expenditure in the current year.

Tags: Capital allowances, Depreciation, Renovations, Repairs, Tax Deductibility, Tax Treatment
Level: Level 2

Topic: Corporate Tax Liabilities
Series: Nov 2024

Uploader: Salamat Hamid