Tax Income

Capital expenses (CapEx) are costs incurred to acquire, upgrade, or improve long-term assets such as buildings, equipment, or property. These are typically one-time or infrequent expenditures that provide value over multiple years.

Operational expenses (OpEx) are ongoing costs incurred during the day-to-day running of the business, such as rent, utilities, salaries, and office supplies. These expenses are recurring and directly related to operations.

Used for acquiring or enhancing assets that contribute to the company's long-term growth and operations.

Used for maintaining and running the business on a day-to-day basis.

Capital expenses are not fully deductible in the year they are incurred. Instead, they are depreciated or amortized over the asset's useful life.

Operational expenses are fully deductible in the year they are incurred, reducing taxable income for the business.

Purchasing machinery, constructing a building, or upgrading IT infrastructure.

Paying rent, utility bills, employee wages, or purchasing office supplies.

Shown as assets on the balance sheet and gradually expensed through depreciation or amortization.

Recorded as expenses on the income statement and directly reduce net income.

Occasional or periodic, depending on the need to acquire or improve assets.

Recurring and regular, reflecting the ongoing operational needs of the business.