Section 39, The Income Tax Act, 2000

(1) A capital allowance deduction is allowed for depreciation of a taxpayer's depreciable assets. (2) Depreciable assets are classified into groups as set out in the Seventh Schedule. (3) The assets in the groups set out in the Seventh Schedule are placed into separate pools for each group and the capital allowance deduction for each pool is determined in accordance with subsections (4) to (12). (4) The capital allowance deduction for each pool is calculated by applying the rate of capital allowance prescribed in the Seventh Schedule against the balance of the pool at the end of the year of assessment. (5) The balance of the pool at the end of the year of assessment is the total of – a) the balance of the pool at the end of the preceding year of assessment after allowing for the deductions under this section for the preceding year of assessment; and b) the adjusted cost base of assets added to the pool in the current year of assessment, reduced, but not below zero, by the consideration received from the disposal of assets in the pool during the year of (6) Where an asset owned by a taxpayer ceases to be a depreciable asset the taxpayer is deemed to have disposed of the asset for its market value. (7) The adjusted cost base of an asset is added to the pool in the year in which the asset is placed in service. (8) Where the consideration received from the disposal of assets in a pool exceeds the balance of the pool at the end of the year of assessment of the disposal, disregarding the amount of such consideration, the balance of the pool is reduced to zero and the excess is included in the taxpayer's assessable income. (9) If the balance of the pool at the end of the year of assessment, after allowing for the deduction under subsection (4), is less than the amount prescribed in paragraph 5 of the Ninth Schedule a deduction is allowed for the amount of the balance. (10) Where all the assets in a pool are disposed of, a deduction is allowed for the balance of the pool at the end of the year of assessment. (11) Where a building is bought or sold together with land, the Commissioner will apportion the total consideration reasonably to arrive at a separate value of the building. 12. Where assets are used only in part for the production of income, the capital allowance deduction is allowed in respect of a proportion of the adjusted cost base equal to the proportion of use allocatable to the production of income. (13) Capital allowances on depreciable assets for businesses within section 21 shall be given in accordance with the Sixth Schedule.