Definition

1. Noun:
   • A tax deduction: A "depreciation allowance" is a tax provision that permits a business or individual to deduct a portion of the cost of a tangible asset over its useful life, accounting for wear, tear, or obsolescence.
   • An accounting provision: It can also refer to an amount set aside in financial accounts to represent the reduction in value of an asset over time.

Usage Examples

• Noun:
  • The company claimed a large depreciation allowance on its new machinery to reduce its taxable income.
  • Calculating the correct depreciation allowance is essential for accurate financial reporting.

Advanced Usage

• "To take a depreciation allowance": To claim this deduction on a tax return.
  • The business owner decided to take a depreciation allowance for the vehicle used for work.

Variants and Related Words

• Depreciation (n): The process or amount of an asset's value decreasing over time.
  • The rapid depreciation of the equipment was noted in the report.
• Capital allowance (n, UK): A term similar to depreciation allowance, referring to tax relief for capital expenditure on assets.

Synonyms

• Amortization deduction (for intangible assets).
• Capital cost allowance (CCA, primarily Canadian usage).

Related Phrases

• Accelerated depreciation allowance: A method that allows for larger deductions in the early years of an asset's life.
  • The government offered an accelerated depreciation allowance to encourage investment in renewable energy.

Noun

1. an allowance for loss due to depreciation