An analysis of the gap between accounting depreciation and tax capital allowance in Malaysia

• Main Authors: Yussof, Salwa Hana, Mohd. Isa, Khadijah, Mohdali, Raihana
• Format: Article
• Language: English
• Published: Elsevier 2014
• Subjects: HF5601 Accounting. Bookkeeping; HJ2240 Revenue. Taxation
• Online Access: http://irep.iium.edu.my/51059/1/salwa_hana.pdf; http://irep.iium.edu.my/51059/; http://www.sciencedirect.com/science/article/pii/S1877042814059072
• Institution: Universiti Islam Antarabangsa Malaysia

Malaysian tax system includes a tax depreciation rule separate from accounting depreciation. This paper is to compares and contrasts the accounting treatment of depreciation and the tax treatment of capital allowance. The gap between the accounting and tax is resulted from different definitions of capital expenditure and qualifying asset and also different deduction rate and useful life used in calculating depreciation. This paper proposes the government to revise the current capital allowance system.