DEDUCTION FOR WEAR AND TEAR 
OF PLANT AND MACHINERY [ S.L.123.01 1
SUBSIDIARY LEGISLATION 123.01
DEDUCTION FOR WEAR AND TEAR OF PLANT 
AND MACHINERY RULES
1st January, 2002
 LEGAL NOTICE 298 of 2001, as amended by Legal Notice 323 of 2001.
Title.
Plant and Machinery Rules.
Interpretation.
Cap. 123.
2. In these rules, unless the context otherwise requires, terms
and expressions used herein shall have the meaning assigned to
them in the Income Tax Act, hereinafter referred to as "the Act".
Deductions for 
wear and tear.
3. Annual deductions for wear and tear of plant and
machinery under article 14(1)( f ) of the Act shall be calculated on
the straight-line method over the minimum number of years,
prescribed in the Schedule to these rules.
Classification of 
assets.
4. Where an item of plant and machinery may be classified
under more than one of the items in the Schedule it shall be
classified in accordance with its preponderating use in each year.
Permissible 
deductions.
5. Annual deductions for wear and tear shall constitute
permissible deductions only in cases where proper records  and
documentation have been kept of the cost of the assets in respect of
which a deduction is claimed .
Cost of asset.
generally accepted accounting principles.
Deductions in 
relation to date of 
acquisition of 
asset.
7. Where the asset is used in the production of the income for
part of the accounting year or year to which a year of assessment
refers only owing to the occurrence of any of the following events,
the annual deduction for wear and tear in respect of that asset shall
be ascertained as set out hereunder:
( a ) if the asset is acquired or completed on any date other
than that on which the year commences, the deduction
shall be calculated as if the asset had been used for the
whole year, and 
( b ) if the asset is sold or otherwise transferred, destroyed
or is put out of use as being worn out or obsolete or
useless or no longer required, on any date other than
that on which the year terminates, no deduction shall
be allowed in respect of the year in which that event
occurs.
Transfer of asset.
( a ) that person is controlled and beneficially owned to the
extent of more than fifty per cent by the other person;
or
( b ) that person controls and beneficially owns more than
fifty per cent of the other person; or
2 [ S.L.123.01
DEDUCTION FOR WEAR AND TEAR 
OF PLANT AND MACHINERY
( c ) both such persons are controlled and beneficially
owned to the extent of more than fifty per cent by
another person or persons,
the wear and tear deductions that shall be due to such person shall
be computed on the lesser of -
(i) the written down value of the asset in the hands
of the other person on the date of acquisition by
such person, such written down value being
calculated after adding or deducting any
balancing charge or allowance as the case may
be; or
(ii) the cost of acquisition to the new owner .
Annual deduction 
in case acquisition 
not by onerous 
title.
9. Where an asset is acquired other than by onerous title, the
annual wear and tear deduction to such person shall not be greater
than that which would have been allowable to the previous owner.
Deduction in 
relation to use and 
ownership of asset.
10. Where a person makes use of an asset which does not
belong to him on such terms that the burden of wear and tear falls
on the user and not on the owner of the asset, wear and tear shall be
computed in accordance with these rules and shall be allowed as a
deduction to the user to the same extent as if the owner of the asset
had retained its use and were using it in the production of the
owner’s income.
Asset used for 
production of 
income and other 
purposes.
11. Where an asset is used both in the production of the income
and for other purposes, annual deduction for wear and tear shall in
all cases be computed in accordance with these rules, but the
deduction to be allowed in each year in respect of such deductions
so computed, shall be reduced in the proportion of the use of the
asset in the production of the income to its total use.
Assets on which 
previous 
allowances were 
claimed.
12. The written down value of plant and machinery in respect
of which a deduction for wear and tear has been allowed prior to
year of assessment 2002 shall, for the purpose of these rules, be
deemed to be the cost of acquisition on which wear and tear
allowances are to be allowed, in accordance with these rules, for
that year of assessment and subsequent years of assessment in
respect of such plant and machinery.
DEDUCTION FOR WEAR AND TEAR 
OF PLANT AND MACHINERY [ S.L.123.01 3
Amended by:
L.N. 323 of 2001.
SCHEDULE
Minimum  number of years over which items of plant and machinery
are to be depreciated
Category Years
1. Computers and Electronic Equipment 4
2. Computer software 4
3. Motor Vehicles 5
4. Furniture, Fixtures, Fittings and Soft
Furnishings
10
5. Equipment used for construction of buildings
and excavation 6
6. Catering Equipment 6
7. Aircraft 12
8. Ships and vessels 10
9. Electrical and Plumbing Installations and
Sanitary Fittings 15
10. Cable Infrastructure 20
11. Pipeline Infrastructure 20
12. Communication and Broadcasting
Equipment 6
13. Medical Equipment 6
14. Lifts and Escalators 10
15. Air-conditioners 6
16. Equipment mainly designed or used for the
production of water or electricity 6
17. Other machinery 5
18. Other plant 10
