Buy Car under Personal or Company Name?
Buy Car under Personal or Company Name?
What is capital allowance
The purpose of capital allowance is to give a relief for wear and tear of fixed assets for business.
Capital allowances are akin to a tax deductible expense and are available in respect of qualifying capital expenditure incurred on the provision of certain assets in use for the purposes of business.
Eligibility of capital allowance
1. Owner of the car;
2. Capital expenditure incurred on the car;
3. The car is in use at the end of basis period;
4. Used for the purpose of the business
WHO is eligible for capital allowance
Legal owner: Entity registered or documented as proof of ownership
Beneficial owner: Entity who incurred the expenditure and payment for the assets (can be proved in books of accounts through supporting documents)
A legal owner who incurs the qualifying expenditure is also the beneficial owner.
If the asset owned is used in his business, the owner is entitled to claim CA.
If a beneficial owner has:
1. Incurred the qualifying expenditure
2. Used the asset for his business,
He is entitled to claim CA although the asset is registered in the name of another person (the legal owner).
Jointly owned assets
What if…
a) more than one person has incurred the qualifying expenditure on an asset,
b) the asset is used in each of their business during the basis period,
c) the asset is registered in the name of one of the beneficial owners or in the name of the third party
WHO is eligible for capital allowance under jointly owned assets
Each of the beneficial owners is entitled to claim CA in respect of the asset.
Basis of apportionment of the CA should be based on his share of qualifying expenditure incurred
Supporting documents
Details of apportionment must be made if more than one person is claiming CA for the same asset.
Source:
IRB Public Ruling
OWNERSHIP AND USE OF ASSET FOR THE PURPOSE OF CLAIMING CAPITAL ALLOWANCES
https://phl.hasil.gov.my/pdf/pdfam/PR_5_2014.pdf
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