New Fixtures and Fittings Incentive

Thanks for the good news and upbeat message delivered by the Minister for Finance in his 2008 budget speech on 15 February 2008!

The government introduced a New Fixtures and fittings Incentives to help businesses.

Current ( Prior to 2008)

• Generally, capital expenditure on fixtures, fittings and installations forming part of a premise are not regarded as “plant and machinery” and thus cannot qualify for capital allowances.
• These expenditures may qualify for industrial building allowance if the fixtures, fittings and installations are part of an industrial building that qualifies for industrial building allowances.

Changes in the 2008 Budget for New Fixtures and Fittings Incentive

• A special allowance is introduced to allow such expenditure, except for expenditures on structural works and expansion of space, incurred during the period from 16 February 2008 to 15 February 2013 to be written off over three years.
• The allowance is subject to a cap of $150,000 every three years per business entity.

Technical / Business Considerations of the New Fixtures & Fittings Incentive

• The introduction of this special allowance is a timely move that would be helpful for many businesses that intend to move to lower rental offices due to rising rental costs. This relief would help to alleviate the cost of renovation arising from the office relocation or for new small businesses that will be incurring renovation costs (which would otherwise be not relieved).
• Given the nature of the assets, it is likely that this allowance will be treated no differently from capital allowance applicable to plant and machinery, subjecting the claims to the business continuity test and no substantial change in shareholding test when utilising any capital allowances brought forward from prior YAs, and be allowed to be carried backwards for set-off or be transferred under the group relief system.

To have a better understanding, and to get detailed advice on the eligibility & claim of the newly introduced Fixtures & Fittings Incentive, get in touch with our experienced Accounting Consultants in Singapore at AccountServe.