Reinvestment Allowance (RA): Schedule 7A Incentive for Existing Companies

Introduction

Reinvestment Allowance (RA) is a tax incentive for existing companies that make reinvestment to expand, modernise, automate or diversify an eligible business activity. This article explains the basic concept, the rate of the allowance, and the conditions of the claim.

What is Reinvestment Allowance (RA)?

RA is an incentive for existing companies that make reinvestment to expand, modernise, automate or diversify an eligible business activity. Main provisions:

• Schedule 7A of the Income Tax Act 1967 (ACP 1967).
• Related rules/orders include P.U.(A) 252/2017 (30 August 2017).

Rate of allowance: 60% set off against 70%

• Allowance of 60% of qualifying capital expenditure.
• Set off against 70% of statutory income each year.
• Unutilised balance may be carried forward.

Conditions and claim details

The claim is subject to the period of operation, the type of project and the provisions of Schedule 7A.

Interaction with other incentives

RA cannot be combined with certain other incentives in specific situations, including group relief claims (s.44A(10)(g)) and pioneer/ITA incentives.

FAQ

Q. What is Reinvestment Allowance? A. RA is an incentive for existing companies that make reinvestment to expand, modernise, automate or diversify an eligible business activity — provided under Schedule 7A of the ACP 1967.

Q. What is the rate of RA? A. An allowance of 60% of qualifying capital expenditure, set off against 70% of statutory income each year; the balance is carried forward.

Q. Where is RA provided? A. Schedule 7A of the ACP 1967 and related rules/orders, including P.U.(A) 252/2017 (30 August 2017).