Generally in the South African environment costs incurred to acquire capital assets are not deductible when incurred in terms of the general deductions formula. The costs are deductible under a number of sections that allow taxpayers to deduct the costs over the asset usage period.

The legislation has special allowances for the following assets:

  • Small business corporations
  • Assets used in the process of general manufacturing
  • Assets used in the process of manufacturing, distribution of electricity including renewable energy and allowances in respect of energy efficiency savings
  • Tax allowances applicable to buildings ( and other permanent structures)
  • Tax allowances applicable to special zoning areas
  • Deduction in respect of airport and port assets
  • Allowances in relation to certain industrial policy projects
  • Special allowances in relation to research and development amongst other special allowances

Incorrect application of the special allowance sections has financial and reputational risk for an entity. Our team can assist with determining the most efficient and applicable section before the assets are brought into use. The team can also review the efficiency of the allowance sections that have been applied to specific assets and advice on accuracy and consistency thereof.

Contact our expert Khanyisa Cingo-Ngandu

Head of Tax

Find out more