FINANCE

CAPITAL ALLOWANCE IN NIGERIA(“TAX DEPRECIATION”)

by obitaxan

Capital allowance is allowance given to tax payer for capital expenditure(“fixed asset”) incurred during the year.

The rate of capital allowance is  fixed by law.

CAPITAL ALLOWANCE  involves the following

1. Initial allowance- once in a life of qualify asset. Full amount  even when not upto 12months=

2.Annual allowance- claimed annually. prorated in accordance to month. (cost-I.A)/N

3.Balancing charge = sales proceed > TWDV

4. Balancing charge= Sales Proceed <TWDV

5.Investment Allowance as specified  by law

CAPITAL ALLOWANCE is allowance given by tax authority for ‘fixed asset’ used in the business .
is used in replacement of depreciation.

The rate is stipulated by law.

Capital allowance is restricted to 2/3 of  assessable profit for any year of assessment except for agricultural and manufacturing business.

TCONCEPT PROFESSIONAL SERVICES is a firm that specialized in tax consulting and accounting. For more information

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Disclaimer: Obi Azubuike is not by this publication acting as a professional advisers and therefore not liable to any  damage whatsoever for your acting or refraining to act based on  this publication. Consult your professional for advice. 

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