Generally, expenses wholly and exclusively incurred in deriving assessable income are allowable deductions. Expenditures that are capital or domestic in nature are generally not deductible.
Depreciation and depletion
Depreciation may be calculated on the cost of a business asset on a straight-line or diminishing-value basis. The prescribed rates of depreciation are based on the estimated life of the asset. Upon disposal of a business asset, either recoupment of depreciation claimed is taxable or the excess of tax written-down value over sale proceeds is deductible. The taxpayer has an option to set-off recoupment of depreciation against the cost of replacement assets. Conformity between book and tax depreciation is not required.
There are three broad bands of depreciation rates for assets (other than buildings). The three broad bands and the depreciation rates are as follows:
|Band||Kind of asset||Diminishing value (%)||Straight line (%)|
|1||Motor vehicles; buses and minibuses with a seating capacity of less than 30 passengers; goods vehicles with a load capacity of less than seven tonnes; computers and data handling equipment; and construction equipment and earthmoving equipment||40||25|
|2||Buses with a seating capacity of 30 or more passengers; goods vehicles designed to carry or pull loads of more than seven or more tonnes; specialised trucks; tractors; trailers and trailer-mounted containers; and plant and machinery used in manufacturing, mining, or farming operations||30||20|
|3||Vessels, barges, tugs, and similar water transportation equipment; aircraft; specialised public utility plant, equipment, and machinery; office furniture, fixtures, and equipment; and any depreciable asset not included in another category||20||12.5|
Certain renewable energy plant and water storage facilities also qualify for a 100% write-off.
Effective 1 April 2020, buildings that are used for commercial or industrial purposes, including multi-storey and multi-unit residential buildings, may also qualify for a 100% write-off, subject to certain conditions.
Capital expenditure aimed at economising on the consumption of fuel, electricity, or its derivatives, or on an asset using energy sources indigenous to Fiji, may be eligible for accelerated depreciation at varying rates.
The cost of the acquisition of a mining lease or tenement and the cost of development of mines may be written off in equal instalments in any five of the first eight years, commencing with the year in which the expenditure was incurred.
Assets of FJD 1,000 or less may be fully depreciated in the year of acquisition.
Effective 1 April 2020, assets of more than FJD 1,000 but less than or equal to FJD 10,000 may be fully depreciated in the year of acquisition provided the asset is acquired in the period commencing on and from 1 April 2020 to 31 December 2020. Effective from 1 August 2020, this incentive has been made permanent.
A deduction for depletion of other natural resources is not available.
Effective 1 August 2022, a taxpayer may apply to claim 100% write-off in the year of expenditure in respect of capital expenditure incurred for the purchase of an electric vehicle used for the taxpayer’s business.
Goodwill, and the amortisation thereof, may be deductible for income tax purposes.
Start-up expenses are deductible for income tax purposes.
Interest expenses that are revenue expenditure wholly and exclusively incurred in deriving taxable income are generally deductible in calculating taxable income, subject to the thin capitalisation rules (see Thin capitalisation in the Group taxation section for more information).
Provisions for expenses not yet incurred (e.g. bad debts) are not tax-deductible. Deductions are generally permitted in respect to amounts that are actually paid or incurred.
Charitable and other contributions
Contributions to approved academic and charitable organisations of up to FJD 100,000 are deductible.
There are certain other specific donations that qualify for varying levels of deductions, including:
- Donations to the Fiji Heritage Foundation, which qualify for a deduction of 150%.
- Donations to Tourism Fiji, which qualify for a deduction of 150%.
- Cash donations exceeding FJD 50,000 to the Poverty Relief Fund for Education, which qualify for a deduction of 200%.
- Cash donations exceeding FJD 50,000 (FJD 15,000 effective 1 January 2020) to a Sports Fund (as approved by the CEO of the Fiji Revenue and Customs Service [FRCS]) for purposes of sports development in Fiji, which qualify for a deduction of 150%.
- Total cost of new computers, laptops, and tablets of not less than FJD 10,000 but not exceeding FJD 100,000 that are donated to urban and rural schools registered with the Ministry of Education, which qualify for a deduction of 150% and 200%, respectively.
- The following payments qualify for a deduction of 150%:
- Cash donations of not less than FJD 10,000 but not exceeding FJD 100,000 to the Disaster Rehabilitation Fund.
- Cash sponsorships of more than FJD 100,000 but not exceeding FJD 200,000 towards the hiring of international sporting coaches.
- Cash donations not exceeding FJD 50,000 towards any approved housing project for squatters by the Fiji government.
- A 300% tax deduction will be available for cash donations made to the COVID-19 Fund.
- Cash donations of not less than FJD 10,000 to the Farmers Disaster Relief Emergency Fund Account, which qualify for a 200% deduction.
- Effective 1 August 2020, cash donations made to a sporting entity recognised by the Fiji National Sports Commission (previously only available for cash donations up to FJD 15,000 made to an 'approved sports fund') qualify for a deduction of 100%.
- Effective 20 August 2020, a 150% tax deduction will be available for any cash donation made to a fund established by the Fiji government for the 50th Independence Day celebrations.
- Effective 1 April 2022, a 200% tax deduction is allowed for sponsorships of not less than FJD 250,000 made to the company that owns and operates the Fijian Drua team.
Fines and penalties
Generally, fines and penalties are not deductible for income tax purposes.
Taxes levied on income are not deductible. Only 50% (100% effective 1 January 2020) of the employer's statutory FNPF contribution paid by the employer is allowed as a deduction for tax purposes in the year the contribution was paid (see Contributions to the FNPF in the Other taxes section for more information). Effective 1 August 2020, 100% of the employer contribution, including any excess contribution, to the FNPF is deductible for tax purposes.
Employee cost not appropriately subject to Pay-As-You-Earn (PAYE) final WHT is not allowed as a deduction for tax purposes.
FBT was previously not allowed as a deduction for tax purposes; however, effective from 1 August 2020, companies will be allowed to claim FBT as a deductible expense.
Net operating losses
Tax losses may be carried forward for eight consecutive years (effective for losses incurred on or after 1 January 2019; all other cases four years), provided the company can demonstrate a minimum 51% continuity of shareholding between the year of loss and the year of claim. Notwithstanding the change in ownership, losses may also be carried forward where a company carries on the same business in the carried forward year as it did in the loss year (subject to certain conditions).
In relation to certain private hospitals and medical services businesses, tax losses may be carried forward for eight years. Please refer to the Medical industry incentives in the Tax credits and incentives section.
Loss carrybacks are permitted, but only in very limited circumstances.
Payments to foreign affiliates
Subject to the normal rules of deductibility, a deduction may be claimed for royalties, management service fees, and interest charges paid to foreign affiliates.