Depreciation for Power Generating Undertakings - Section 32(1)(i)

Depreciation treatment for power generators: disposal shortfall can be terminal depreciation, excess may trigger balancing charge and capital gains.

Depreciation for power generating undertakings allows choice of Straight Line on each asset or Written Down Value on a block. When an asset depreciated under Straight Line is disposed, compare written down value at the year's start with actual sale consideration: a shortfall is deductible as Terminal Depreciation (if written off in books and not disposed in year of first use), while an excess is taxed partly as Balancing Charge to the extent of prior depreciation and the balance as Capital Gains; disposal in the year of first use yields capital gains treatment for any profit.