Article 78 establishes a rule for determining the depreciable basis of an asset. It stipulates that any capital expenditure borne directly or indirectly by the Government or any person other than the taxpayer shall not be regarded as 'capital expenditure' for the purposes of claiming depreciation. This prevents taxpayers from claiming tax allowances on assets they did not personally fund. If an asset is subsidized or gifted, the taxpayer can only depreciate the portion they actually paid for, ensuring that tax relief is strictly linked to the taxpayer's own capital investment.
Part 3 - Chargeability to Tax
Chapter 3 - Depreciation of Capital Assets
Section 1 - General Rules
Article 78
[GTL Notes: Exclusion of Third-Party Funded Capital Expenditure]
There shall not be regarded as capital expenditure, for the purpose of this chapter, the expenses borne directly or indirectly by the Government or any person other than the taxpayer.
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