1. With effect from the year of assessment 2009, a company or a person has to be in operation for not less than 36 months to be eligible for RA.
2. RA given to a qualifying company or person is equivalent to 60% of capital expenditure incurred in the basis period for a year of assessment in relation to a qualifying project.
3. RA is to be deducted against the statutory income of the business but is restricted to 70% of the statutory income.
4. With the amendment to the proviso to paragraph 3 of Schedule 7A of the ITA 1967, RA for projects located in promoted area as described in paragraph 5.3.1(a) can no longer be deducted against the whole statutory income. Deduction for RA has been reduced from 100% to 70% of statutory income.
5. Unabsorbed RA
i. Any RA not absorbed in a year of assessment by reason of an insufficiency or absence of statutory income can be carried forward and deducted against the statutory income of the business in the following years of assessment until the allowance is fully absorbed.
ii. Any unabsorbed RA to be carried forward and deducted in subsequent years of assessment is restricted to 70% of the statutory income of the business.
6. RA is given on company basis and not on project basis. A company can enjoy RA for more than one project for the same year of assessment
7. Disposal Of Assets - With effect from the year of assessment 2009, amendment to
paragraph 2A of Schedule 7A of the ITA 1967 provides that RA will be
withdrawn if an asset is disposed of within 5 years from the date of
acquisition of the asset.
AUTOMATION CAPITAL ALLOWANCE
1. Companies currently claiming Reinvestment Allowance (RA) under Schedule 7A, Income Tax Act 1967 can opt to claim this incentive provided that either one of these two incentives is claimed in the same year of assessment. The period of RA will continue even though the company has opted for this incentive. However, the company must utilize the full amount of RM4 million for Category 1 or RM2 million for Category 2 before it continues to claim RA.
2. If a company that has been in operation for 36 months decides to claim this incentive first before claiming RA, the incentive period under category 1(year of assessment 2015 to 2020) and 2 (year of assessment 2015 to 2020) will form part of the 15 years period of RA
3. P.U.(A) 252/2017 allows an accelerated capital allowance on qualifying capital expenditure if certain conditions are fulfilled, while P.U.(A) 253/2017 allows an income tax exemption (in respect of statutory income) equivalent to the amount of the capital allowance determined under P.U.(A) 252/2017.
4. P.U.(A) 252/2017
Allowance (5) (6)
Initial allowance of 20% and annual allowance of 80% on the first expenditure incurred.
5. P.U.(A) 253/2017
Exemption (4) (3) statutory income (5) (2)
The ammount of allowance referred to .... one hundred per cent of the amount of allowance for which the qualifying company is entitled...
The amount of statutory income so excempted ... shall not exceed seventy per cent for each year of assessment.
(Source:http://www.ctim.org.my/download.asp?cat=14&file=DFHKI_erv08r56zr06%20Nyy19n0pr%20-%20ceJ_FDEF%20(EFEDEF).2qs)
