Capital Allowances In South Africa

Capital Allowances are a relief from income tax and are based on the capital expenditure incurred on the provision and installation of certain assets within a building that suffer wear and tear, usually plant and machinery, as well as on various types of properties, including certain industrial buildings, hotels and others.

Every building contains an element of depreciable plant and machinery, which will qualify for capital 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 buildings or structures are concerned, there is often very significant scope for increasing capital allowances by proper planning. The tax savings resulting from such an exercise can be too great to ignore.

By claiming capital allowances you are easing your tax burden, thereby improving the net return of a property and increasing cash flow. Capital allowances planning should therefore form a vital part of ensuring the viability of any property transaction.