Capital Expenditure....how to calculate?

[dark horse]

I am just wondering with capital expenditure for bought in 2012, is it taken into account what month the expences occurred?
My accountant wants to apportion the capital expenditure according to the dates but I thought that 12.5% of the whole amount of the expence could be deducted....that if it was bought in march 2012 or nov 2012 wasn't relevant?

My last accountant didn't do this.....does anyone know for a fact how it is calculated. If I look at the revenue website it just calculates 12.5% of the cost occurred during the relevant year.

 

[mandelbrot]

The legislation (Section 284 TCA 1997) states that where plant & machinery is in use at the end of the chargeable period (in your case the income tax year ending 31 December) then the wear & tear allowance is due for that chargeable period. It makes no reference to having to time-apportion the allowance.

Revenue's notes for guidance are consistent with this, stating ([broken link removed] - page 53):
"It should be noted that the allowance is available even if the machinery or plant is acquired and put into use for trade purposes towards the end or, indeed, on the last day of the chargeable period or its basis period. Thus, in the case of a chargeable period or its basis period of 12 months ending 31 December, if machinery or plant is provided and put into use for trade purposes on 31 December, title to the full wear and tear allowance still exists."

This is consistent with the treatment in the year of disposal; you do not get any wear & tear allowance in the year you dispose of a capital item, even if you dispose of it on 30 December.

 

[dark horse]

Thanks for that. I don't know why he wants to apportion it according to the month. Time for a chat I suppose!