The Income Tax (Accelerated Capital Allowance) (Machinery and Equipment Including Information and Communication Technology Equipment) Rules 20211 ("Rules") were gazetted on 15 June 2021.

The Rules shall have effect from the Year of Assessment ("YA") 2020.2

Pursuant to the Rules, persons who have incurred or will be incurring qualifying plant expenditure ("QPE") on machinery and equipment (including information and communication technology equipment ("ICT Equipment")) for business purposes between 1 March 2020 and 31 December 2021 are eligible for Accelerated Capital Allowance ("ACA")3 in the following manner:

  1. Initial allowance: 20% of the QPE incurred;4 and
  2. Annual allowance: 40% of the QPE incurred.5

Under the Rules, QPE refers to a capital expenditure incurred under paragraph 2 of Schedule 3 to the Income Tax Act 1965 ("ITA") in relation to provision of machinery and equipment including ICT Equipment except motor vehicle.6 According to the Rules, ICT Equipment includes the following equipment:

  1. Access control system;
  2. Banking systems;
  3. Barcode equipment;
  4. Bursters / Decollators;
  5. Cables and connectors;
  6. Computer Assisted Design (CAD);
  7. Computer Assisted Manufacturing (CAM);
  8. Computer Assisted Engineering (CAE);
  9. Card readers;
  10. Computers and components;
  11. Central Processing Units (CPU);
  12. Storages;
  13. Screens;
  14. Printers;
  15. Scanners / readers;
  16. Accessories; and
  17. Communications and networks.7

It should however be noted that a person who has previously been eligible for and claimed ACA in respect of the same QPE, be it a claim for deduction under the Income Tax (Accelerated Capital Allowance) (Automation Equipment) Rules 20178 or an exemption under the Income Tax (Exemption) (No. 8) Order 20179 will not be eligible to claim ACA under the Rules.10

Further, the Rules include a deeming provision relating to hire purchase agreement. It provides that where a person incurs QPE under a hire purchase agreement for the purchase of machinery and equipment including ICT Equipment for business purposes, that person shall be treated as the owner of such machinery and equipment including ICT Equipment and the QPE incurred by that person shall be taken to be the capital portion of any instalment payment, or where there is more than one such payment, of the aggregate of those payments made by that person under the hire purchase agreement.11


As the recently gazetted Rules have effect from the YA 2020 and apply to QPE incurred on machinery and equipment including ICT Equipment for business purposes from 1 March 2020 onwards (until 31 December 2021), persons (including companies12) who are eligible to claim the ACA under the Rules and have filed their tax returns for the YA 2020 may revise their tax computations and submit an amended tax return to claim the ACA. Such revision must be done by 31 December 2026.13


1 P.U.(A) 268/2021.

2 Rule 1(2).

3 Rule 3.

4 Rule 5.

5 Rule 6.

6 Rule 2.

7 Rule 2 and Schedule.

8 P.U.(A) 252/2017.

9 P.U.(A) 253/2017.

10 Rule 7.

11 Rule 4.

12 Section 2, ITA.

13 Sections 131A(1) and 131A(2), ITA.

Originally published 21 June 2021

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