Separate book depreciation from a Singapore capital-allowance claim

Book depreciation does not establish a Singapore capital-allowance deduction. IRAS describes capital allowances as relief for qualifying fixed assets used in the business, generally in place of nondeductible depreciation. Begin with the asset register, then identify which items the tax reviewer accepts as qualifying plant and machinery.

Give each asset a stable reference linking its invoice, business use, acquisition terms and accounting record. Flag assets funded by grants, acquired for donation or subject to specific restrictions. Keep a reason for any exclusion. An expense coded to equipment may need a different analysis, and an asset appearing in the financial statements is not automatically eligible for every tax method.

IRAS describes different write-off routes, including one-year treatment for qualifying computers or prescribed automation equipment, three-year treatment and working-life allowances. Record the specific method and Year of Assessment approved for each item. Avoid deriving the tax claim simply by applying the accounting depreciation rate.

Check the effective period of any accelerated option before reusing last year's workbook. The two-year option described in the current IRAS guidance applies to qualifying acquisitions in specified years, including YAs 2021, 2022 and 2024; it is not a permanent option for every new purchase. Preserve the method decision and remaining tax value so the next preparer can continue the claim consistently.

Section 19A's low-value route applies an individual asset cost limit of S$5,000 and an aggregate one-year claim limit of S$30,000 per Year of Assessment. Identify the assets actually selected for that route and test the aggregate across the company, rather than letting each department use the full cap independently.

Suppose operations selects S$18,000 of assets for the low-value route and the workshop separately selects S$16,000. Every individual asset meets the cost limit, and each departmental list is below S$30,000. Combined, however, the proposed company claim is S$34,000. The reviewer must decide which assets use this route and which need another eligible method or treatment. Bring both lists into one approval before filing; separate purchasing budgets do not create separate annual caps. Preserve the approved selection by asset so a rejected claim does not reappear in the other department's schedule.

For the relevant one-year and three-year hire-purchase calculations, IRAS bases allowances on deposit and principal amounts paid, with the method determining the allowance pattern. Obtain the agreement and repayment schedule showing principal separately from interest. A bank installment total is not the principal amount.

If a hypothetical payment is S$900 principal plus S$60 interest, carry S$900 into the principal schedule and retain S$60 separately for its own tax assessment. Reconcile deposits, installments and outstanding principal to the financing records. Ask the adviser how the chosen method applies to those payments instead of claiming the full purchase price and then claiming principal again in later years.

The final schedule should show opening tax value, supported additions, current claim and remaining value by asset. Flag disposals, transfers and changes in use for the tax reviewer before rolling the schedule forward. Reconcile the approved allowance total to the tax computation and retain the method decisions with the supporting invoices. Next year's preparer should be able to distinguish an exhausted claim from an omitted asset or a deliberately deferred decision.