What Expenditure Applies?

The applicable expenditure will generally be the cost of the qualifying asset to the taxpayer, and may be incurred either on the development of a new building, refurbishment and alterations to an existing building or the purchase of an existing building.

Every building contains fixed assets i.e., plant and machinery, which will qualify for wear and tear allowances, such as air-conditioning equipment, hot water installations, lifts and escalators, fitted carpets, furniture and fittings, to name a few. However, other less obvious assets may also qualify, for example, emergency lighting, fire alarm systems and security equipment.

Where a building is developed or refurbished directly by the taxpayer, the cost of the qualifying assets can usually be extracted from the development cost information including bills of quantities and final accounts, etc.

Tenants may also qualify where they incur expenditure on qualifying assets in fitting out a building.

Where a property has been purchased, capital allowances are available as an apportionment of the purchase price. It is therefore necessary to separate the cost of any qualifying assets from the land and buildings and then apportion its cost from the purchase price using valuation techniques approved by SARS.