capital depreciation allowance(i think)

[nediaaa]

hi,
i spent 70K getting my business up and running last year.
Iam getting my books done for last year and was wondering what the situation with capital depreciation ie#
is it 20% every year for 5 years eg 70,000 x 20% = 14000.
Am i entitled to this 14000 back

Any help would be greatly appreciated

 

[Graham_07]

Depreciation in the accounts would be at whatever rates are appropriate for the assets and the business. e.g. you may consider 20% over 5 years to be appropriate.
That depreciation is a cost in the accounts.

For tax purposes depreciation is not allowed as a deduction. Instead Capital ALlowances are granted on allowable assets at 12.5% pa for 8 years. You therefore get a deduction against your income of that amount. Assuming that the full €70K qualifies for normal Capital Allowances then you get a deduction against your income of €8,750pa for 8 years. It is a deduction not an absolute tax amount, it reduces your taxable income by €8,750pa.

Your accountant or whoever is doing up the books for you can explain this more if you are unsure.