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Leasehold improvements are generally capital in nature and not deductible as general expenses. So where you use premises for the carrying on of your trade and you effected improvements thereon, you may be able to claim an amount for tax.
Where there is a legal obligation under the lease agreement to effect leasehold improvements, the improvements made by the lessee may be claimed. This section allows a capital deduction over the remaining lease period or 25 years (whichever is the shorter) from the year in which the improvements are completed. The value of leasehold improvements stipulated in the lease agreement may be deducted over the above mentioned period. Where no value is stipulated, the fair and reasonable value as determined by the Minister of Finance should be claimed. Where required improvements and costs are clearly set out in the lease agreement, the amount will be deductible.
In the absence of an obligation to effect leasehold improvements, one should determine whether such improvements would qualify for deduction under any of the other available capital allowances.
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