The four factors that determine whether SARS will grant you a wear and tear allowance for your fixed assets or not…

43984, 31 Oct. 2014

Tags: sars, allowances, wear and tear allowance

Good news: In terms of tax law, you can claim a wear and tear allowance on any machinery, plant, implements, utilities and other articles you own as long as you use them in your trade and they’ve been worn down by wear and tear or depreciation in the year of assessment.
But SARS won’t grant you a wear and tear allowance that easily.
It will only give you an allowance for your fixed capital investments (assets) if you meet four factors.
Read on to find out what these are so you’ll know for sure where you stand when it comes to an allowance.
Four factors that influence wear and tear allowances on fixed assets
An asset is something you own that’s valuable and useful and will either make or save you money. It’s also something you can generally use for more than 12 months.
SARS will grant you an allowance for your fixed capital investments (assets) depending on the following factors:
1. The size of your business
Some allowances are limited to businesses that are small business corporations (SBCs).
2. The industry you operate in
Farmers, manufacturing enterprises and certain building industries, such as those engaged in urban renewal projects, have their own specific allowances.
3. The type of assets you own
For a manufacturing company, certain allowances apply only to the production plant, while different allowances apply to computer equipment, office furniture and delivery vehicles.
4. Initiatives that government encourages
The declaration of certain inner-city areas as Urban Development Zones has specific allowances to encourage the private sector to invest in infrastructure in these designated zones.
There you have it: SARS will use these four factors to determine whether or not to grant you a wear and tear allowance for your fixed assets.

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