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Thread: Unsure if opening costs can be capitalised or claimed as expense

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    Unsure if opening costs can be capitalised or claimed as expense

    Hi, we recently constructed a new shopping mall. Management has requested that the costs relating to the opening function, be capitalised. I am not 100% sure. It would be better to write it off as an expense for tax purposes, but can it capitalised against the building?

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    Platinum Member Marq's Avatar
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    My thought is that it is an expense.
    I am not sure of the tax definitions but I would think that you can only capitalise expenses where they ensure a substantial capital benefit beyond say a year period.
    This would be similar to capitalising the first tank of petrol in your car.
    I would also imagine that the cost a party is negligible in comparison to building a shopping maul, (Freudian slip) and this discussion would make no real difference to the finances except to bring the whole company into the tax spotlight. Not a clever move.
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    It is capital in nature, so you should treat it that way (it has no bearing on income)

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