ATTENTION
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LA315
Taxation Law - UNIT 9
Wednesday, 18th September, 2001
Agenda for Today
Status of Papers, 2nd Assignment
Depreciation & Amortization
Review of Deductions
No deduction for capital expenditures or losses Fiji ITA Sec. 19(i).
BUT Capital allowances
And Depreciation Deductions
No deductions for goodwill, intellectual property rights, other intangibles
Depreciation - 2
No deduction with respect to land
Depreciation - 3
Fiji ITA Sec. 21(1)(a) (1998):
the following deductions shall be allowed:
(a) An amount, in accordance with instructions issued by the Minister under this paragraph:
Depreciation - 4
(i) for depreciation of capital expenditure incurred; or
(ii) for capital expenditure incurred on improvements to land use[d] for agricultural or pastoral purposes
Depreciation -5
Also capital allowances for alternative energy sources and for agriculture (by Instruction)
Depreciation - 6
a deduction shall be allowed for annual depreciation on any machinery, instruments, utensils, rolling stock, buildings, and other articles or plant, owned by a taxpayer and used by him for producing income.
Depreciation - 7
Basically, depreciation in respect of:
Articles (equipment, etc.)
Plant
Buildings
Depreciation - 8
Plant = whatever apparatus is used in the business other than:
Intangibles
Stock-in-Trade
Buildings
Land
Consumable Supplies
Depreciation - 9
Ownership:
Should the law require legal or economic ownership?
Finance lease legal ownership only
Depreciation Math
Useful life of asset asset categories
Standard rate or accelerated rate (standard plus 20%)
Partial depreciation in first year
See Table p. 186
Exceptions
Assets with useful life under two years
Assets with cost under $300
Depreciation of Buildings
Depreciation Rate depends on material used for construction
No allowance with respect to preparation of land including demolishing old buildings
Cost & Basis
Depreciation basis = original cost of asset:
For buildings: to first owner;
For everything else: to each purchaser in succession
Disposition of Assets
Balancing Charge:
If asset sold for more than its depreciated basis
If asset sold for less than its depreciated basis or lost, abandoned, etc.
See example p. 189
Assignment for Next Week
Text, pp. 226 262 (companies, trusts, partnerships)
Remember NO ASSIGNMENT 2
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