Income Tax Act 1947 · 2020 Revised Edition · Part 6 · Capital Allowances
19E. Use of open‑market price for making allowances under sections 19, 19A and 19D
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This section applies for the purpose of making an allowance under section 19, 19A or 19D for capital expenditure incurred in acquiring any machinery, plant or IRU (called in this section the property), and applies despite anything in that section.
capital expenditure
“capital expenditure”, in relation to the purchase of a building or structure, means the net price paid for the building or structure, but does not include the cost of land as determined to the Comptroller’s satisfaction;
If the capital expenditure (not being a deposit or an instalment payment) incurred for the acquisition of the property exceeds the open‑market price for the property, then, for the purpose of determining the amount of allowances for the capital expenditure under section 19, 19A or 19D, the Comptroller may treat the open‑market price as the amount of that expenditure.
Comptroller
“Comptroller” means the Comptroller of Income Tax appointed under section 3(1) and includes, for all purposes of this Act except the exercise of the powers conferred upon the Comptroller by sections 34F(9), 37L(7), 37M(5), 67(1)(a), 95, 96, 96A and 101, a Deputy Comptroller or an Assistant Comptroller so appointed;
In subsection (2), the open‑market price for the property is either —
the price which the property could have been purchased in the open market on the date of its acquisition; or
where the Comptroller is satisfied by reason of the special nature of the property that it is not practicable to determine the price mentioned in paragraph (a), such other value as appears to the Comptroller to be reasonable in the circumstances.
If the capital expenditure consists of deposits and instalment payments and the total amount of the deposits and instalment payments (excluding any finance charges) made in any basis period exceeds a proportion of the open‑market price for the property as computed under subsection (5), then, for the purpose of determining the amount of allowances for the expenditure under section 19, 19A or 19D, the Comptroller may treat that proportion of the open‑market price as the amount of that expenditure.
In subsection (4), the proportion of the open‑market price for the property is an amount computed by the formulawhere —
A is the total amount of the deposits and instalment payments (excluding any finance charges) made in the basis period;
B is the total amount of all the deposits and instalment payments (excluding any finance charges) payable to acquire the property; and
C is either —
the price (excluding any finance charges) which the property could have been purchased in the open market on the date of its acquisition; or
where the Comptroller is satisfied by reason of the special nature of the property that it is not practicable to determine the price mentioned in sub‑paragraph (i), such other value as appears to the Comptroller to be reasonable in the circumstances.
In this section, “IRU” has the meaning given by section 19D(1).