Capital Incentive Allowances

ASSET TYPECONDITIONS FOR ANNUAL ALLOWANCESANNUAL ALLOWANCES
Industrial BuildingsCost of buildings or improvements, provided building is used wholly or mainly for carrying on a process of manufacture or similar processEither 2%,5%, or 10% depending on date cost incurred
Commercial & Residential Buildings in Designated Urban Areas (no deduction allowed if building or part of building is brought into use by the taxpayer on or after 31 March 2020)Refurbishment of existing building (excluding low-cost residential units)20%
Construction of new building and extension to existing buildings (excluding low-cost residential units)20% in 1st year 8% in each of 10 subsequent years
Low-cost residential units: New buildings or extension/additions to existing buildings where taxpayer incurs the costYear 1: 25% of the cost Year 2 – 6: 13% of the cost Year 7: 10% of the cost
Low-cost residential units: Improvements to existing buildings where the existing structure is preserved and where taxpayer incurs the costYear 1: 25% of the cost Year 2 – 4: 25% of the cost
Low-cost residential units: New buildings or extension/additions to existing buildings where taxpayer purchased building from developerYear 1: 55% × 25% of the cost Year 2 – 6: 55% × 13% of the cost Year 7: 55% × 10% of the cost
Low-cost residential units: Improvements to existing buildings where the existing structure is preserved and where taxpayer purchased
building from developer
Year 1: 30% × 25% of the cost Year 2 – 4: 30% × 25% of the cost
Hotel BuildingsCost of portion of building or improvements used5%
Improvements that do not extent the exterior framework of the building20%
Commercial
Buildings
Cost of erecting any new and unused building as well as new and unused improvements wholly or mainly used for the purpose of producing income
in the course of trade
5%
Taxpayer acquires part of a building that is new and unused wholly or mainly to be used for producing income in the course of trade55% × 5% of the cost
Taxpayer acquires part of a building that has new and unused improvements to be wholly or mainly used for producing income30% × 5% of the improvement
Aircraft & ShipsMust be used for purposes of trade20%
Plant & MachineryNew or unused manufacturing assets40% in 1st year 20% in each of the 3 subsequent years
Plant & machineryNew and unused plant or machinery used by the taxpayer directly in a process of manufacture by a Small Business Corporation100% of cost
Renewable Energy
– Machinery
– Supporting Infrastructure
Small scale embedded solar photovoltaic renewable energy with generation capacity not exceeding 1000 kW Road & fences where the electricity production will exceed 5 MW100% of cost


100% of cost
Residential Units – at least five units must be ownedNew & unused units, erected or improved, situated in South Africa, owned & used by the taxpayer for the purposes of a trade he carries on.Normal Unit 5% Low Cost unit 10%*
New & unused units acquired, situated in South Africa, used by the taxpayer for the purpose of a trade he carries onNormal unit 55% × 5% Low cost unit 55% × 10%
Unit acquired with a new and unused improvement, situated in South Africa, used by the taxpayer for the purpose of a trade he
carries on
Normal unit 30% × 5% Low cost unit 30% × 10%

*a building not exceeding cost of R300 000 or an apartment not exceeding a cost of R350 000

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