Capital allowances are the Singapore tax system’s substitute for accounting depreciation. Because IRAS does not recognise depreciation as a deductible expense, every Singapore company that invests in plant, machinery, fit-out, or industrial buildings has to translate its capital expenditure into a separate tax claim under sections 19, 19A, and (where it still applies) the Industrial Building Allowance regime in section 16 of the Income Tax Act 1947.
For most owner-managed businesses, capital allowances are the second largest line item on the corporate tax computation after the company’s own salaries. Getting them right — and timing them well — can shift a company between paying tax and showing a loss. Getting them wrong can cost a refund or invite an IRAS query letter years later.
This guide explains what qualifies, the difference between the standard write-down under section 19 and the accelerated regimes under section 19A, the special rules for low-value assets, the position on commercial vs industrial property, and the practical steps to claim correctly on Form C-S or Form C.
Why Capital Allowances Matter
Singapore has a one-tier corporate tax system with a headline rate of 17%. The accounting profit reported in your financial statements is not the same as the taxable profit IRAS assesses. One of the largest reconciling items is depreciation: it is deducted in the accounts but disallowed in the tax computation. In its place, IRAS allows capital allowances on qualifying expenditure.
For a complete refresher on the corporate tax framework, see our companion piece on Singapore corporate tax 2026: rates, exemptions and filing. Capital allowances also interact directly with the partial tax exemption and start-up exemption schemes that determine the cash tax payable.
What Qualifies as “Plant and Machinery”?
The starting point for any capital allowance claim is whether the asset is “plant or machinery” used in the trade. The Income Tax Act does not exhaustively define plant — the term has been worked out through case law, principally Yarmouth v France (1887) and adopted in Singapore. Plant is whatever apparatus is used by a businessperson for carrying on the business, as distinct from the setting in which the business is carried on.
In practice, IRAS treats the following as qualifying:
- Computers, servers, networking equipment
- Office furniture and fittings (desks, chairs, partitions)
- Manufacturing machinery and tools
- Motor vehicles used for the business (subject to special restrictions for private cars)
- Air conditioning systems and lifts (where part of qualifying plant)
- Software (treated under section 19A(2) for outright deduction over one or three years)
- Renovation works that do not extend to “structure” — see Section 14Q below
The following do NOT qualify:
- The building itself (structure, walls, roof) — the pre-2010 Industrial Building Allowance regime is essentially closed to new claims
- Land
- Goodwill, trademarks, patents (separate intellectual property regimes apply under section 19B)
- Private cars (S-plate cars) — capital allowances on these are not allowed at all per section 19(5A)
Section 19: The Standard Write-Down
Under section 19 of the Income Tax Act, plant and machinery is written down on a straight-line basis over its prescribed working life. The Sixth Schedule to the Act lists working lives ranging from 5 years (computers, motor vehicles, office equipment) up to 16 years (heavy industrial machinery).
The annual claim is computed as:
(Capital expenditure − any insurance/sales proceeds) ÷ prescribed working life
Section 19 also entitles you to an initial allowance of 20% of the qualifying capital expenditure in the year of purchase, in addition to the annual straight-line allowance. So if you buy machinery for S$100,000 with a working life of 10 years:
- Year 1: 20% IA (S$20,000) + 10% AA (S$8,000) = S$28,000
- Years 2-10: 10% AA (S$8,000) per year
- Total over 10 years: S$100,000
Section 19A: Accelerated and One-Year Write-Off
Section 19A is where the planning happens. It offers three accelerated alternatives to the section 19 working-life regime:
Section 19A(1): 3-year accelerated write-off
Companies can elect to write off plant and machinery over three equal annual instalments instead of the prescribed working life. This is useful for assets with long working lives where the company wants the deduction sooner. The election is made asset-by-asset on Form C-S or C and is irrevocable for that asset.
Section 19A(2): 1-year write-off for specific assets
The following assets qualify for full write-off in the year of purchase:
- Computers (including monitors, printers, scanners)
- Prescribed automation equipment (robotics, CNC machines)
- Generators
- Office equipment costing not more than S$5,000 per item
- Medical equipment, specified safety equipment, energy-efficient equipment
Section 19A(10A): 1-year write-off for low-value assets
This is the workhorse provision for SMEs. Any asset costing not more than S$5,000 per item can be fully written off in the year of purchase, provided the total claim under this provision does not exceed S$30,000 in the year of assessment. For most professional services firms, almost the entire fit-out (chairs, monitors, partitions, small equipment) falls within this cap.
Section 19A(2): 2-year write-off (Budget 2024 enhancement)
A temporary enhancement allowed certain qualifying plant and machinery acquired in YA 2024 and YA 2026 to be written off over two years (75% in year 1, 25% in year 2). Companies that had qualifying acquisitions in those years should review whether they elected this option — for many it produced a materially better cash tax outcome than the standard 3-year regime.
Section 14Q: Renovation and Refurbishment
Renovation works (new flooring, partitions, electrical works) are typically treated as capital and would normally be non-deductible. Section 14Q grants a separate deduction over three years on a straight-line basis for qualifying R&R expenditure, capped at S$300,000 every three consecutive years of assessment.
Items that fall within section 14Q (and so cannot also be claimed under section 19A) include:
- General electrical installation and wiring
- Light fittings and lighting
- Hot/cold water systems (pipes, water tanks, pumps)
- Flooring (tiles, carpets, vinyl)
- Wall coverings and partitions
- Doors, gates, and roller shutters
- False ceilings and cornices
Items that are excluded from section 14Q (these usually fall back to non-deductible structural alterations): expansion or alteration of premises, work on a building’s structure, fine art, and any item that confers a permanent advantage on the property.
For F&B operators, this distinction matters enormously — a kitchen fit-out can run into hundreds of thousands of dollars and the boundary between section 19A plant and section 14Q renovation is often where IRAS focuses its query letters. See our piece on the compliance guide for Singapore F&B companies for sector-specific considerations.
Industrial Building Allowance: A Closing Door
Industrial Building Allowance (IBA) under section 16 of the Income Tax Act used to be Singapore’s mechanism for writing down the cost of factories, warehouses and similar industrial buildings. The regime was phased out from YA 2011, though companies that had a qualifying claim before that date can continue to claim the residual annual allowances over the remaining write-down period.
For all practical purposes, no new IBA claims arise today. Industrial property buyers should expect no tax depreciation on the building itself; only the qualifying plant and machinery within it (lifts, air-conditioning, sprinklers) attract capital allowances under section 19/19A.
Special Rules: Hire Purchase, Disposals and Balancing Charges
Hire purchase
Where plant is acquired on hire purchase, capital allowances are computed on the cash price (excluding HP interest), claimed proportionately as the deposit and instalments are paid in each YA. The HP interest is separately deductible as a finance expense under section 14(1)(a).
Disposals and balancing charges
When a depreciable asset is sold, scrapped or stops being used in the business, the company must compute a balancing allowance (further deduction) or balancing charge (additional taxable income), depending on whether the disposal proceeds are below or above the tax written-down value.
The balancing charge is capped at the cumulative capital allowances previously claimed — IRAS does not turn capital gains into income through this back door. But within that cap, the recovery is fully taxable, which can produce nasty surprises in the year of asset disposal. Plan asset replacements carefully, especially for vehicles and machinery you have already written off in full under section 19A.
Capital Allowances and Loss Utilisation
Excess capital allowances that cannot be absorbed in the current year of assessment become unabsorbed capital allowances. These can be:
- Carried forward indefinitely against future income from the same trade (subject to the substantial shareholding test)
- Carried back one year of assessment under the loss carry-back relief, subject to a S$100,000 cap
- Transferred to other group companies under group relief in section 37C, subject to qualifying conditions
For loss-making startups in their early years, deferring the section 19A election (taking the slower section 19 write-down instead) can preserve allowances for future profitable years. This is one of the few areas of Singapore corporate tax where the timing of the election directly affects long-term cash tax. We discuss the relationship with the start-up tax exemption in our corporate tax guide.
Documentation IRAS Will Want to See
IRAS does not generally require supporting documents to be filed with Form C-S or Form C, but they must be retained for at least five years from the relevant year of assessment under section 67 of the Income Tax Act. For each capital allowance claim, keep:
- Tax invoice from the supplier showing the asset and price (excluding GST if claimed as input tax)
- Hire purchase agreement and instalment schedule, where applicable
- Asset register identifying each item, date of purchase, cost, and the section under which the claim is made
- For section 14Q: a clear breakdown of the renovation contract showing which items fall within the section 14Q-eligible list
- For motor vehicles: registration documents to confirm whether commercial or private use
For background on what IRAS expects in a tax audit, our small-company audit exemption guide and director duties guide provide the corporate-governance framing.
Worked Example
A Singapore consulting company spends the following on its new office in YA 2026:
- 20 laptops at S$2,200 each — total S$44,000
- Office desks and chairs — S$28,000 (each item under S$5,000)
- One commercial photocopier — S$8,000
- Office partitions and false ceiling — S$45,000
- Lighting and electrical works — S$22,000
The optimal claim:
- Laptops: section 19A(2) computer write-off → S$44,000 in YA 2026
- Desks/chairs: section 19A(10A) low-value asset write-off (within S$30,000 cap) → S$28,000 in YA 2026; balance reverts to standard section 19 if cap is exceeded
- Photocopier: section 19A(1) 3-year write-off → S$2,667 per year over three years
- Partitions, lighting, electrical: section 14Q over three years → S$22,333 per year over three years (total S$67,000)
Total YA 2026 deduction: approximately S$97,000 in the first year, with further claims rolling into YA 2027 and 2028.
Conclusion
Capital allowances are not the most exciting part of running a Singapore business, but they are one of the most controllable. The right combination of section 19, 19A and 14Q claims can shift the timing of tax deductions by years and free up cash that would otherwise sit in a deferred tax position. The wrong combination — or, more commonly, no claim at all on items that should have been claimed — leaves money on the table.
If your company has just completed an office fit-out, a machinery upgrade, or a fleet refresh, the team at Raffles Corporate Services can review your fixed asset register, optimise your section 14Q vs section 19A allocation, and prepare the capital allowance schedules ready for inclusion in your Form C-S or Form C filing. The IRAS source materials can also be accessed via the IRAS website and the Income Tax Act 1947 on SSO.
— The Editorial Team, Raffles Corporate Services