Fixed Asset Register & Capital Allowances

A company buys a delivery van for S$60,000. Its accounts depreciate the van over five years. Its tax computation writes it off over three. Two years later, the van is sold for S$35,000.

Here is what that one sale produces:

In the accounts
  Cost                          60,000
  Depreciation, 2 years        (24,000)
  Net book value                36,000
  Sale proceeds                 35,000
  Loss on disposal              (1,000)

In the tax computation
  Cost                          60,000
  Capital allowances, 2 YAs    (40,000)
  Tax written down value        20,000
  Sale proceeds                 35,000
  Balancing charge — taxable    15,000

On the GST return (if registered)
  Output tax at 9%               3,150

Same van, same sale, three different numbers — a S$1,000 loss in the accounts, S$15,000 of taxable income in the tax computation, and S$3,150 of GST to pay over. All three are correct. Producing them depends on having kept two sets of values for the van since the day it arrived, and remembering on the day it left that selling a used van is a GST supply.

That is the job of a fixed asset register. This guide covers what capital allowances are, the choices that matter for an SME, what happens when assets are sold or scrapped, and the register that makes the claims defensible. It is written for SME owners and finance admins — your accountant makes the elections, but they can only elect on assets your records can evidence.

Why depreciation and capital allowances are different numbers

IRAS is direct about this: depreciation in your financial statements is not tax-deductible. In its place, companies claim capital allowances for the wear and tear of qualifying fixed assets used in the business.

The two run on different rules for good reasons. Depreciation follows accounting judgement — your estimate of useful life and residual value. Capital allowances follow the Income Tax Act — fixed periods, fixed percentages, and elections you make when filing. For any asset you own, the book value and the tax written down value (TWDV) will drift apart from the first year, and a register that only tracks one of them is half a register.

Two timing points worth knowing:

Capital allowances can be claimed when the expenditure is incurred — when the legal liability to pay arises, not when you actually pay.
The claim is made in the Corporate Income Tax Return for the Year of Assessment (YA) covering the financial year the asset was acquired. If you missed the corporate tax filing guide, that is the return due on 30 November.

What qualifies — and the expensive exceptions

Capital allowances are for plant and machinery used in the trade: equipment that functions as an apparatus for carrying on the business, is not trading stock, and is not part of the premises itself. Computers, machinery, furniture, vans, kitchen equipment, and tools all fit.

The exceptions are where SMEs lose money:

Cars. No capital allowances on S-plated private cars, or on Q-plated and RU-plated business cars, unless the car is registered as a private hire car or for driving instruction and used that way in the business. Vans, lorries, and motorcycles bought for business use do qualify, and the COE is part of the vehicle's cost. On the GST side, input tax on buying and running a motor car is also disallowed under Regulation 27, so a company car is usually a cost with no tax relief on either front.

Renovation. False ceilings, partitions, flooring, lighting, doors, roller shutters, and electrical and water fittings are part of the premises, not plant. They don't qualify for capital allowances. Most of them qualify instead for the Section 14N renovation and refurbishment deduction:

Capped at S$300,000 of qualifying spend per fixed three-year period — YA 2025 to YA 2027, then YA 2028 to YA 2030, and so on
Claimed over three consecutive YAs from the year the spend is incurred
Must be claimed in the YA the spend relates to — renovation spend that is not claimed in that YA cannot be claimed later
From YA 2025, designer and professional fees count, unless they relate to structural works that need Commissioner of Building Control approval

That last rule is why a fit-out invoice should never sit in "Repairs" waiting to be sorted out. A S$45,000 office renovation booked as a one-off expense, then caught by your accountant as capital, has to be reclassified and claimed in the right year. If nobody catches it, the deduction is simply lost.

Grant-funded assets. Capital allowances are not given on expenditure funded by Government or statutory board capital grants approved on or after 1 January 2021. Buy a S$400,000 machine with S$100,000 of grant funding, and allowances are given on S$300,000. With EDGE now the main SME grant, record the grant against the asset when the award letter arrives — not when someone remembers at year end. GST input tax on the purchase is still claimable if the usual conditions are met.

Choosing how fast to write it off

Every qualifying asset needs a write-off method. For most SMEs the real choice is between the first three rows:

Method	What qualifies	How it is claimed
One-year, low-value [S19A(10A)]	Assets costing S$5,000 or less each	100% in one year, total capped at S$30,000 per YA
One-year, computers [S19A(2)]	Computers and prescribed automation equipment — laptops, printers, software	100% in one year
Three-year [S19A(1)]	Any qualifying asset	One third of cost each year
Working life [S19]	Any qualifying asset	20% initial allowance, then the remaining 80% spread over 6, 12, or 16 years

How the low-value cap works in practice: buy S$38,000 of furniture and fittings in a year, each item under S$5,000, and S$30,000 can be written off immediately. The remaining S$8,000 goes over three years or the working life instead.

The working-life method rarely suits a profitable SME — it is slower than the three-year option for most assets. If you use it, the choice of 6, 12, or 16 years is an irrevocable election made when filing the return for the YA the asset was acquired.

Hire purchase. Allowances follow what you have paid, not the full price. Each YA's claim is based on the deposit and the principal portion of instalments paid in that basis period. The interest portion is not part of the asset's cost. A hire-purchase asset whose original cost is S$5,000 or less still qualifies for the low-value write-off on the instalments paid each year.

Deferring. A company in a loss position, or one using the start-up tax exemption, can defer capital allowance claims instead of claiming them. Companies in loss can also claim and carry the unutilised allowances forward against future income, subject to the shareholding test and the business continuity test. This is an accountant's call — but it only works if the register shows which assets have been claimed on and which have not.

When an asset leaves

Disposals cause more tax-computation errors than acquisitions, because nothing forces anyone to record them. A supplier invoice arrives when a laptop is bought; nothing arrives when it goes in the bin.

Sold. Compare the sale proceeds with the tax written down value:

Sale proceeds − TWDV = balancing charge (if positive, taxable)
                       balancing allowance (if negative, deductible)

A balancing charge is capped at the total allowances previously claimed on that asset. In the van example, S$40,000 had been claimed, so the full S$15,000 charge is taxable.

Scrapped or written off. Sale proceeds are nil, so the remaining TWDV becomes a balancing allowance — a deduction you only get if someone records that the asset is gone. Assets that were thrown out years ago but are still on the register are the most common error in SME registers. Get rid of these "ghost assets" every year.

Converted to trading stock. Use open market value instead of sale proceeds. Equipment you start selling, or display units that become stock, cross into the stock control rules from that date.

Sold to a related company. In certain related-party transfers, an election under Section 24 lets the asset move at its TWDV, with no balancing adjustment for the seller. The buyer continues the allowances from there. Make the decision before the transfer, not after.

The GST side of a disposal

If you are GST-registered, assets leaving the business are supplies:

Selling a used asset — office furniture, equipment, machinery, vehicles — is a standard-rated supply even though it is not your trading stock. Charge GST on the price, issue a tax invoice, and report it in Box 1 and Box 6 of the return.
Giving an asset away or scrapping it can still trigger output tax at open market value, unless it has no market value or cost S$200 or less. The "no market value" test needs written evidence, such as a certificate of destruction or an authorised write-off. The stock control guide covers these rules in detail; they apply to business assets the same way.
Deregistering for GST means accounting for output tax on assets you still hold, including equipment, if their total open market value exceeds S$10,000.

The common failure is the van that gets sold to a friend of the director for cash, with no invoice. The proceeds go to the bank, the asset stays on the register, the GST is never declared, and the balancing charge never reaches the tax computation.

What a fixed asset register needs

IRAS asks for three supporting schedules behind every capital allowance claim: additions (description and cost of assets bought in the year), disposals (description, cost, sale proceeds, and profit or loss on disposal), and the capital allowance calculation itself (cost or TWDV brought forward, allowances claimed, and TWDV carried forward, per asset category). Form C filers submit these with the return. Form C-S and Form C-S (Lite) filers keep them and submit only if IRAS asks.

A register that can produce all three without reconstruction has these fields:

Identity

Asset ID, physically tagged on the item where practical
Description, category, location, and the person responsible for it
Supplier, invoice number, and a link to the invoice itself

Acquisition

Invoice date (when the liability arose) and date first used
Cost excluding GST if input tax was claimed; including GST if it was not (cars, for example)
Funding: cash, hire purchase (with the agreement), or grant (with the grant amount)

Book side

Depreciation method, useful life, residual value
Accumulated depreciation and net book value

Tax side

Write-off method and any election made, with the YA
Allowances claimed each YA, and the TWDV
Whether claims have been deferred

Exit

Disposal date, how it left (sold, scrapped, converted, transferred), and proceeds
GST invoice number for the sale, or the write-off evidence
Balancing allowance or charge

Two policies to decide once and write down. First, a capitalisation threshold — the cost above which a purchase goes on the register rather than straight to expenses. Pick one that suits your business. Then remember that the tax treatment follows what the item is, not where you booked it. A S$1,500 chair expensed in the accounts is still capital for tax: your accountant adds it back and claims it as a low-value asset instead. Second, a physical verification once a year: walk the office with the register, confirm each tagged item exists, and write off what does not.

Most cloud ledgers, Xero included, can hold the register and post book depreciation every month. The tax columns often live in your accountant's computation spreadsheet instead. That works as long as both use the same asset IDs, and someone reconciles the additions and disposals between them every year.

As with every other IRAS record, keep the register and its supporting invoices for five years — and for an asset you hold longer, keep the acquisition invoice for as long as you are still claiming on it. A document retention workflow makes that automatic.

Where the register breaks — and where automation helps

Fixed asset registers almost never fail at year end. They fail at the moment an asset arrives or leaves, when nobody thinks of it as an accounting event:

The asset arrives as an ordinary bill. A laptop on a supplier invoice gets coded to "Office expenses" because that is what the last invoice from that supplier was. Automated invoice data extraction can flag line items above your capitalisation threshold for review instead of auto-coding them. When the bill is coded to a fixed-asset account, a draft register entry is created with the invoice already attached.
Nobody records how it was funded. A purchase order for a capital item is the natural place to capture whether it is cash, hire purchase, or grant-funded — before the invoice arrives, not after.
The chart cannot tell assets apart. One "Equipment" account for computers, vans, and renovation makes the tax categories a manual sort. A chart of accounts with separate accounts for computers, furniture and fittings, motor vehicles, plant, and renovation does half the classification on entry.
Depreciation is posted once a year. Monthly depreciation as part of the month-end close keeps the management accounts honest. It also means a missing asset shows up in a month, not at the audit.
Disposals have no trigger. A simple disposal form — what left, how, for how much — that creates the GST invoice and updates the register at the same time. That closes the van-sold-for-cash gap.

None of this needs judgement from software. Write-off elections, Section 24 decisions, and deferral strategy belong to your accountant. Automation makes sure every asset that arrives is captured, every asset that leaves is recorded, and the three IRAS schedules come straight from the register.

For how this connects to the rest of the finance function, see the finance automation guide for Singapore SMEs.

The bottom line

The rules that matter most for a Singapore SME:

Depreciation              → not deductible; claim capital allowances instead
Low-value assets          → ≤ S$5,000 each, 100% in one year, cap S$30,000 per YA
Computers & automation    → 100% in one year
Everything else           → typically one third a year over three years
Cars (S / Q / RU plated)  → no capital allowances, GST input tax blocked
Renovation (Section 14N)  → S$300,000 per fixed 3-year period, claim in the year incurred
Sale or scrapping         → balancing charge or allowance against TWDV, plus GST on sales

The allowances themselves are generous. The money is lost in the records: renovation bills booked to repairs, scrapped assets still on the register, grant funding nobody linked to the asset, and used equipment sold without a GST invoice. A register with a book side, a tax side, and an exit record turns all of these into routine entries instead of year-end surprises.

Use the Calcudesk automation ROI calculator to estimate what year-end reconstruction costs you. If your fixed asset register is a spreadsheet your accountant rebuilds every October, book a 30-minute discovery call and we will map where assets go missing between purchase and tax computation.