2014 FIJI TAX AND CUSTOMS INCENTIVES - … · 270,000 5,460 +20% of excess over $50,000 ... • Investment Allowance can only be written-off against the ... o Evidence of payment

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2014 FIJI TAX AND CUSTOMS

INCENTIVES

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CONTENTS

Page

2001-2014 Investment Package 3

Hotel Industry Incent ives 4

Audio Visual Incent ives 5-6

Agr iculture Incent ives 7

Smal l and Micro Enterpr ises 7

Tax Free Region Incent ives 8

ICT Incent ives 8

Manufacturers 9

Other Incent ives 9

Other Customs Concess ions 10

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YEAR RESIDENT COMPANIES

NON-RESIDENT COMPANIES

2001 From 35% to 34% From 45% to 34%2002 From 34% to 32% From 34% to 32%2003 No change – 32% No change – 32%2004 From 32% to 31% From 32% to 31%2005 – 2008 No Change – 31% No Change – 31%2009 From 31% to 29% From 31% to 29%2010 From 29% to 28% From 29% to 28%2011 28% 28%2012 From 28% to 20% From 28% to 20%2013 20% 20%2014 20% 20%

• A foreign company that establishes/relocates itsHeadquarters to Fijiwill be subject to a low corporatetaxrateof17%.

• A listed company on the South Pacific Stock Exchange(SPSE)willbesubjecttoalowcorporatetaxrateof10%.

• Income earned from trading of shares in SPSE will beexemptedfromIncomeTaxandCapitalGainsTax.

Chargeable Income ($)

PAYE Tax Payable ($)

Social Responsibility Tax (SRT) Payable

0-16,000 Nil16,001 – 22,000

7%ofexcessover$16,000

22,001– 50,000

420+18%ofexcessover$22,000

50,001 – 270,000

5,460+20%ofexcessover$50,000

270,001-300,000



300,001 - 350,000



350,001 - 400,000



400,001 - 450,000



450,001 – 500,000



500, 001 – 1,000,000



1,000,001 +195,460 + 20% ofexcessover

$1,000,000

197,900+29%ofexcessover

$1,000,000

CORPORATE TAX RATE REDUCTION

RESIDENT TAXPAYERS: 2014 PAYE AND SRT STRUCTURE

2001-2014 Investment Package

NON-RESIDENT TAXPAYERS: 2014 PAYE AND SRT STRUCTURE

C h a r g e a b l eIncome($)

PAYETaxPayable($) SocialResponsibilityTax(SRT)Payable

0-16,000 20%ofexcessof$016,001 – 22,000 3,200+20%of

excessover16,00022,001– 50,000 4,400+20%of

excessover$22,00050,001 – 270,000


270,001 -300,000



300,001 - 350,000



350,001 - 400,000



400,001 - 450,000



450,001 – 500,000



500, 001 – 1,000,000

100,000+20%ofexcessover$500,000


1,000,001 + 200,000 + 20% ofexcessover

$1,000,000

197,900+29%ofexcessover

$1,000,000

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• Investment allowance (excluding cost of labor) of 40%forextensionandrenovationexpenseswithaminimumqualifying capital expenditure of $50,000. This is onlyavailabletoexistingbusinessesinVanuaLevu.

• Accelerateddepreciationforbuildingerectedbefore2001hasbeenextendedto2014.20%depreciationforbuildingusedforagricultural, commercialor industrialpurposecanbewrittenoffwithinany5of8years.

• 100%write offwill be available in the year the expenditurewasincurredonwaterstoragefacilitiesandrenewableenergyplantandmachineries.

• Thiswillalsobeavailabletonewplantsandmachineriesusedformanufacturingpurposes.

INVESTMENT ALLOWANCE

ACCELERATED DEPRECIATION

2001-2014 Investment Package

• “Exportincome”meansnetprofitsderivedbyataxpayerfromthe business of exporting goods and services but excludesre-exports.Deductionshownbelow.

Yearofassessment Percentage of export income to bededucted

2011 50%2012 40%2013 40%2014 40%

• Export income deduction will only be allowed if theCommissioner of Inland Revenue is satisfied that the exportearningswillberemittedtoFiji.

EXPORT INCOME DEDUCTION

• Losscarriedforwardcanbeclaimedupto4years.Losscarried forward by a company is allowed if that entitysatisfies the continuity of ownership test or the samebusinesstest.

LOSS CARRIED FORWARD

PRODUCTION INPUTS• All goods used as rawmaterials in themanufacture of

approved goods not available locally will attract 3%fiscal duty + 15% VAT, and all raw material used formanufacturing by companies outside of Viti Levuwillattract0%fiscalduty+15%VAT.

CAPITAL ITEMS• Duty rates on capital items (which refer tomachinery

used for converting / processing raw materials) willattract0%fiscalduty+15%VAT.

DUTY SUSPENSION SCHEME• Enables exporters to have access to inputs without

havingtopayfordutiesupfront.• Importedgoodsareconditionallyrelievedfrompayment

offiscaldutyandVATonthebasisthatsuchgoodswillbesubstantially transformedthroughmanufacturingorprocessingandsubsequentexportation.

• TheSchemewouldentitleexporterstoimportdutyfreeanamountequaltotheproportionofapprovedimportedinputsrequiredtoproduceexports.ThisiscalledentitledProportion(EP).

• Administered by the Fiji Export Council, which is aprivatesectorledorganization.

• ZerofiscaldutyonNewMachineryandEquipmentthataredirectlyrelatedtotheproductionprocess.

DUTY CONCESSIONS

Hotel Industry Incentives

• Investment allowance (in addition to ordinarydepreciation) of 55% of total capital expenditure isallowedasadeductionprovidedthere isnoshiftof taxrevenuetoothercountries.

• Applicabletobuildingofnewhotelincludingrenovations

or refurbishments or extensions of existing hotel andInternationalRetireeFacilities.

• InvestmentAllowancecanonlybewritten-offagainsttheincome of the hotel business or income from the hotelpremises.

STANDARD ALLOWANCE

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• Lossescarriedforwardextendedto8years.• Recipients of the provisional approval for Standard

Allowance to commence implementation of projectwithinoneyear.

• Investorswould only need to provide a sketch plan toobtainprovisionalapprovalfortheinvestmentallowance,andnotnecessarilyacertifiedapproved.

STANDARD ALLOWANCE (CONT’D)

Hotel Industry Incentives

• 10yeartaxholidayforcapitalinvestmentsnotlessthan$7million.

• Import duty exemption on all capital goods (includingcapital equipment, plant &machinery) not available inFijibutthisdoesnotincludefurnitureormotorvehiclesthatareusedincarryingouttheinvestment.

• Short Life InvestmentPackage (SLIP) Incentives is alsoavailableforretirementfacilitiesandhospitalresorts.

• Recipients of the provisional approval for StandardAllowance to commence implementation of projectwithinoneyear.

• Investorswould only need to provide a sketch plan toobtainprovisionalapprovalfortheinvestmentallowance,andnotnecessarilyacertifiedapproved.

NEW SHORT LIFE INVESTMENT PACKAGE

• Income tax exemptions for locally owned backpackeroperatorswithannualsalesturnoverof$1morless.

• Dutyexemptionontheimportationofrawmaterialsandequipment used for the establishment of a backpacker

hotel.(Thisincentivewillonlybeavailabletobackpackerbusinesseswhoaregrantedtheincometaxholiday).

BACKPACKER OPERATIONS

Audio Visual Incentives

• 150%deductionforcapitalexpenditureonanF1audio-visualproduction.

• 125%deductionforcapitalexpenditureonanF2audio-visualproduction.

Levels of Expenditure in Fiji for an audio-visual production for F1 and F2 status should not be less than:

• 40%fora large format film,a feature filmorbroadcasttelevisionprogrammes;

• 50% for a direct to video programme or video diskprogramme;and

• 55%foranaudiorecording.

INCOME TAX DEDUCTIONS

• Net income from an F1 production is exempt untiltaxpayerhasreceiveda60%returnoncapitalexpended.Thereafter,netincomewillbefullytaxedatthemarginalrate.

• Net income from an F2 production is exempt untiltaxpayerhasreceiveda50%returnoncapitalexpended.Thereafter,netincomewillbefullytaxedatthemarginalrate.

INCOME TAX EXEMPTION

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• Anysoleproprietor,partnershiporcompanythatcarriesonaproductionactivity(theproductionof,distributionoforsupplyofservicestoaudio-visualproductions)mayqualify for anoperating licence in the StudioCity ZoneandbeentitledtoanexemptionfromtaxontheincomefromtheproductionactivitycarriedonintheZone.

• Tax free status for “permanent residents”of the StudioCity Zone on income derived as earnings from audio-visualproductions.

For residence in the Zone to be approved, in the case

of citizens, the individual must be:• residentintheZoneforatleast183days;• havepre-taxaudiovisualearningsinexcessof$100,000;

• havefixedassetsintheZoneinexcessof$250,000;and• maintainaprimaryplaceofresidenceintheStudioCity

Zone. For residence in the Zone to be approved, in the case

of non-citizens (or a citizen who derives a minimum of 80% of audio visual earnings from outside Fiji), the individual must be: -

• residentintheZoneforatleast60days;• havepre-taxaudiovisualearningsinexcessof$100,000;• havefixedassetsintheZoneinexcessof$250,000;and• maintain a permanent place of residence in the Studio

CityZone.

STUDIO CITY ZONE CONCESSIONS

Audio Visual Incentives

Summary Part IV, 6th Schedule – Income Tax ActFijiFilmTaxRebateBill

RebateAmount

47%taxrebateorcreditonproductioncostsspentinFiji:paragraph68(1)

Eligibility Filmsandtelevisionproductions,asperexistingSixthSchedule:paragraph69

MinimumSpendincountry

MinimumspendinFijiF$250,000forfeaturefilmsandbroadcasttelevision;and$50,000forproductionintendedasanadvertisingprogramorcommercialinatleastonesignificantinternationalmarket:paragraph69(e)

MaximumRebate

F$11.75million,soevenifmorethan$25millionspentinFijithemaximumrebateisstillF$11.75million:paragraph68(2).

Exclusions Whereaproducerhaschosentoaccessthefilmtaxrebate,theproducerwillnotbeabletoobtainanyothertaxconcessionsunderParts3ofSixthSchedule:paragraph67(2).

Additional Incentives (Allowable Expenditures):• Allowable expenditure incurred for services rendered

by the producers (producer’s fees) – provided thatsuch expenditure shall not exceed10%of the total FijiExpenditure. Producers are not restricted to remain inFijithroughouttheproductionofthefilm.

• 75%oftheexpenditureincurredtopurchasecostumes,make-up and set design properties not available in Fijithat will be used in relation to the film production inFiji provided that any such costumes,make-up and setdesign properties shall be left in Fiji at the end of theproduction.

• Expenditureincurredtopurchasethewriter’sstoryandrights for the production of the film provided that theproducersubmitsthefollowingdocumentaryevidence:

o Notarized legal contract with the writer which isregistered in Fiji with the Registrar of Deeds uponpaymentoftheappropriatestampduty;

o Evidenceofpaymentmadedirectlyintothewriter’sbankaccountfromtheFijibankaccount;and

o Receiptofacknowledgementofpaymentreceived.• Approvedpost-productionexpenditureonthefilmpaid

fromaFijibankaccounttotheextentthatitisincurredorreasonablyattributable toapprovedpost-productionservices in relation to the completing of the filmmadeinFiji.Themaximumpayableinrebateshallbegrantedupond the production of documentary evidence of theexpenditure. Rebate is around 2%-2.5% of productionbudget.

• Expendituresincurredonhiringofcamerasandfilmingequipment from outside Fiji, where such cameras andfilmingequipmentarenotavailableinFiji.

Additional Requirements:• CompaniesshouldengageAudioVisualAgents• Fijiasalocationneedstobeaccreditedandacknowledged

inthefilm’screditsandotheraccreditationasstipulatedbyFilmFijiintheirapprovalletter.

FILM TAX REBATE

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Agriculture Incentives

• TheImportationofallagriculturalitemswillbesubjecttozeroDuty.

COMMERCIAL AGRICULTURE AND AGRO-PROCESSING

• Theincomeofanynewactivityincommercialagriculturalfarming and agro-processing approved and establishedfrom 1 January 2010 to 31 December 2014 shall beexempt from tax for 10 consecutive fiscal yearswith acapitalinvestmentof$2,000,000ormore.

NEW BUSINESSES FROM 2009 ONWARDS

• 10yeartaxholidayisavailabletoataxpayerundertakinganewactivityinprocessingagriculturalcommoditiesintobio-fuelsasapprovedbytheCommissionerfrom1January2009to31December2014.Toqualify,thetaxpayermusthave:-

- Minimumlevelofinvestmentof$1,000,000;and - Employ20localemployeesormoreforeveryincomeyear.• Dutyfreeimportationofplant,machineryandequipmentforinitialestablishmentofthefactory.• Dutyfreeimportationofchemicalrequiredforbio-fuelproduction.

BIO – FUEL PRODUCTION

Small And Micro Enterprises

Incometaxexemptiontobeapplicabletoselectedsectorswithmaximumturnoverthresholdof$500,000.Thesectorsinclude:• AgricultureandFishing(SugarcaneFarmers;Coconuts;Rice;Ginger;Yaqona;Fishing;RaisingLivestock;Vegetable;dalo,

cassavaandotherrootcropsproduction;farmingandBeekeeping).• Tourism(SeaCruiseandRivertourOperators).• CommunityandSocialServices(Amusement,recreationservices;traditionalhandicraftproducers(not“middleman”or

agents).• Supportive projects to tourism industry (flora, fauna and other natural characteristics of Fiji; and history, traditions,

culturesandwaysoflifeofitspeoples).

SMALL AND MICRO ENTERPRISES

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Tax Free Region (TFR) Incentives

Who will qualify for this incentive?This incentive is available to a newly incorporated entityengagedinanewtrade,businessormanufactureestablishedinthefollowingareas:-• Vanua Levu – included Taveuni, Rabi, Kioa and

other islands generally included for government’sadministrativepurposeasbeingintheNorthernDivision.

• Rotuma• Kadavu• Levuka• Lomaiviti• Lau;and• EastofVitiLevu(Korovou-Tavuaregion)

• AnycompanymayapplytotheMinisterforFinanceinaprescribedform(Form6)foranoperatinglicense.

Criteria for Grant of License• Thecompanyisanewlyincorporatedentityengagedina

newtrade,businessormanufacture.• The minimum initial level of investment should be

$250,000from1January2010.

Tax Exemptions Available(i)Theincomeofanynewactivityapprovedandestablished

between1 January2010to31December2018shallbeexemptfromtaxasfollows:• capitalinvestmentfrom$250,000to$1,000,000,for

aperiod5consecutivefiscalyears;or• capital investment from $1,000,000 to $2,000,000,

foraperiodof7consecutivefiscalyears;or• capital investmentabove$2,000,000foraperiodof

13consecutivefiscalyears.

Duty Exemption Importdutyexemptionontheimportationofrawmaterials,machinery and equipment (including parts and materials)insofar as they are required for the establishment of thebusinessintheTaxFreeRegion.

Other benefits under the TFR• Additional5yearsof incometaxexemption isavailable

toanycompanygrantedalicenseandhavingindigenousFijianlandownerequityofatleast25percent.

• Additional7yearsof incometaxexemption isavailableto any hotel developer granted a license and havingindigenousFijianlandownerequityofatleast25percent.

TFR INCENTIVES

Information Communication Technology (ICT) Incentives

ICT INCENTIVES

Theincomeofanynewoperatorwhoisgrantedalicensefrom1January2009tobeexemptfromtaxforaperiodof13years

• Any new operator may apply and pay a license feeof $1,000 per annum to the Commissioner of InlandRevenue.TheTaxexemptionisgrantedfromthedateoftheinitiallicense.

• Incometaxexemptionisavailabletoinvestorsunderthefollowingcriteria:-

• Business employs 50 employees ormore for any 6monthswithintheincomeyear;and

• 60percentofitstotalservicesisexported.• Duty free importation of computer, computer parts &

accessories, plant, equipment & fittings, and specilisedfurnitureforinitialestablishmentandduringitsongoingoperations to approved ICT/BOP Business operatorsfrom1January2009.

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Manufacturers Incentives

- 100% of the amount of investment as a deductionfor investing in food processing as well as forestry.Re-investment will also be allowed for expansionpurposes.Inordertoqualify,theinvestorshouldutilize50%oflocalproduceinitsproductionprocess.

FOOD PROCESSING & FORESTRY

• 5yeartaxholidayisavailabletoataxpayerundertakinganewactivity in renewableenergyprojectsandpowercogenerationasapprovedbytheCommissioner.

• Dutyfreeimportationofrenewableenergygoodsisalsoavailable.

RENEWABLE ENERGY PROJECTS AND POWER CO-GENERATION

Other Incentives

Maritime Shipping- 100% of the amount of investment as a deduction

for investing in food processing as well as forestry.Re-investment will also be allowed for expansionpurposes.Inordertoqualify,theinvestorshouldutilize50%oflocalproduceinitsproductionprocess.

SHIPPING COMPANIES UNIT TRUST COMPANIES

Withholding Tax and Capital Gains Tax Waiver- Withholding taxes and capital gains taxes on interest

incomedistributiontoinvestorsoftheUnitTrustswillbewaived.

• This Programme is open to citizens of other countriesrecognized by Fiji in the “Fiji My Second HomeProgramme”asadministeredbytheReserveBankofFiji.

• Interest incomeisexemptfromtaxunderthefollowingcriteria:-

o Agebelow50yearsold:• Minimumdepositof$150,000andmaintainthe

depositinFijiforaminimumoftwoyears. o Age50yearsandabove::

• Minimumdepositof$100,000andmaintainthedepositinFijiforaminimumoftwoyears.

• To qualify the applicant must maintain a minimumbalance of $50,000 from the third year onwards andthroughouttheentirestayinFiji.

FIJI MY SECOND HOME PROGRAMME FOREIGN CURRENCY ACCOUNT SCHEME

• Interest incomeisexemptfromtaxwhichaccruestoorinfavorofanon-residentincludingformerFijiresidentswhoholdfundsinFijicommercialbankaccountsunderthefollowingcriteria:-- For foreign currency accounts, interest income for

depositabovetheequivalentofFJD$150,000;- For Fiji Dollar accounts, any amount of interest

income.

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• Employment Taxation Scheme– 150%of the salary andwages paid by an employerwithin 1 January 1997 and 31December2018are taxdeductible.Thededuction is restricted tosalaryandwagespaid inrespectof12-monthperiodcommencingfromthedateoftheappointmentoftheemployeeprovidedheorshehasnotpreviouslybeeninfull-timepaidemployment.Thisisextendedtotraineesandapprentices.

• DonationofnewComputers,Laptops&Tablets-150%and200%taxdeductionsfordonationofcomputerstoschoolsregisteredwiththeMinistryofEducation,willbeavailablewiththefollowingfeatures:- 200%taxdeductionrelatestodonationtoschoolsinruralareas.- 150%taxdeductionrelatestodonationtoschoolsinurbanareas- Donationstobebetween$10,000to$100,000.

• Voluntary Contribution for Disaster Relief - 150% tax deduction for voluntary contribution of cash donation bybusinessestowardsaDisasterReliefFund.Thethresholdwillrangefromaminimumcontributionof$10,000toamaximumcontributionof$100,000.

• SportsSponsorship-150%taxdeductionforsportssponsorshipwithaminimumcashsponsorshipof$50,000.

• SponsorshipofhiringofinternationalCoaches–150%taxdeductionforsponsorshipbetween$100,000and$200,000towardsthehiringofinternationalsportingcoaches.

• CashContributiontowardsHousingProjects -150%taxdeductionforcashcontributionsupto$50,000towardsanyGovernmentsanctionedhousingprojectforsquattersandinformalsettlements.

• IncentivesforSeniorCitizens-AllSeniorcitizens(over55years)andPensionerswillbeexemptedfrompayingresidentinterestwithholding tax on interest incomeof up to $16,000 frombankdeposits, provided this is their only source ofincome.

OTHER INCENTIVES

Other Incentives

OTHER CUSTOMS CONCESSIONS

Newly introduced concessions

Items Descriptions FiscalDuty

VAT(%)

Food Supplements

Reducefiscaldutyonfoodsupplementsfrom32%to0%Foodsupplementsincludeessentialvitaminsandfortificationswhicharepredominantlyusedbypregnantmothers,seniorcitizensandchronicallyillpatients.

0% 15%

Babyfeedingbottles

Reducefiscaldutyonbabyfeedingbottlesfrom32%to0%.Toreduceimportationofcheaplowqualitybabybottleswhichmaycausehealthrisks.

0% 15%

ShippingIncentives

Dutyontheimportationofallsparepartsformaritimevesselsisreducedto0%. 0% 15%

PromotedomesticFishingindustry

ExemptionofBunkerfeeof2cents/litreforlocalfishingvessels;Dutyconcessiononspecializedfishingitem/equipmentwhicharecurrentlynotcoveredundertheexistingconcessionforthefishingindustry.

- -

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Items Descriptions FiscalDuty VAT(%)

Agriculture Dutyontheimportationofallagriculturalitemswillbereducedto0%. 0% 15%Adultsanitarydiapers

DutyontheImportationofallsanitarydiaperswillbereducedto0% 0% 15%

Pre-fabricatedhomes(kithomes)

Dutyonprefabricatedhomeswillbereducedfrom32%to3%anddutyonprefabricatedconcreteproductsandironpanelsforcommercialusewillbereducedfrom32%to5%.

Prefabhomes(3%)

Prefabconcrete&Ironpanels(5%)

15%

Dutyconcessionforreturningresidents

Dutyconcessionundercode220(FreeFiscal,Freeimportexcise,FreeVAT)onimportationofhouseholdeffectsandvehiclesbyreturningresidents.ThisconcessionissubjecttocertainconditionsunderCode220.

0% Free

NEWLY INTRODUCED CONCESSIONS (cont’d)

Other Customs Concessions

Industry Items F i s c a lDuty

V A T(%)

Agriculture&Dairy

Specialised agriculture, livestock and dairy machineries, equipment and agriculturalinputs excluding those that attractduty ratesof freeFiscal and free ImportExcise intheTariff.TheimportationunderconcessionissubjecttotheconditionthataletterofapprovalisissuedbytheMinistryofAgricultureinrelationtogoodsunderconcession.

Free 15%

B u sOperators

BusoperatorsholdingRoadServiceLicenceoperatingunderscheduletripsapprovedbyLandTransportAuthority.Refund of duty on gas oil (diesel) having sulphur content not exceeding 500ppmpurchasedex-dutypaidstock.

2 centsper litrerefund

Fisheries &Forestry

Specialisedmachineriesdirectlyusedforfisheriesandforestrypurposes.Theimportationunder concession is subject to the condition that a letter of approval is issued byDepartmentofFisheries&DepartmentofForestsinrelationtogoodsunderconcession.

Free 15%

M a r i t i m eS a f e t yAuthority ofFiji(MSAF)

LifejacketsprocuredfromlocalmanufacturersoperatingunderTFForDSS.Theimportedrawmaterialsincorporatedinthemanufactureoflifejackets.

Free 15%

S p o r t sSupplement

Protein shakes and sporting tablets/capsules that will enhance athletic performancebysupplyingnutrientstothebodywhicharelostintheprocessofstrenuoustrainingand fitness programs. This concession does not extend to the products Powerade,Gadtorade,RedBull,V-DrinkandMother,etc.

Free 15%

OTHER EXISTING CONCESSIONS

DISCLAIMER

These incentives are available as at 1st January 2014. For their availability and application, please contact FRCA Policy and Research Unit: Phone: (679) 3243021 Fax: (679) 3302 321e-mail: FRCA-Policy&[email protected]: www.frca.org.fj

Documents

2014 FIJI TAX AND CUSTOMS INCENTIVES - … · 270,000 5,460 +20% of excess over $50,000 ... • Investment Allowance can only be written-off against the ... o Evidence of payment