sa-examples
 

Example

As an example, take an air-conditioned office building purchased for R100 million. The plant and machinery qualifying for capital allowances might have an apportioned cost of say R20 million. As an illustration this may be written down against tax by approximately R2,800,000 per year for the first five years.

Allowances under section 11(e) of The Income Tax Act No 58 of 1962 are available over agreed and approved write-off periods, in line with SARS Interpretation Note No. 47 on a straight-line basis.

With the current tax rate on companies of 28%, the saving to the investor’s tax bill will be R784,000 in the first year alone, with an overall saving in the first five years of R3,920,000 in this example.

Year Wear & Tear
Allowances
R
Annual
Write-Down
R
Tax Relief to a
28% Taxpayer
R
1 20,000,000 2,800,000 784,000
2 2,800,000 784,000
3 2,800,000 784,000
4 2,800,000 784,000
5 2,800,000 784,000

If this property has an 9% yield, it will be equivalent to only 6.48% after 28% tax. Capital allowances relief of R784,000 in the first year has the effect of increasing the net yield to 7.26%.

 
 
 

The information contained in our website is believed to be correct, but there may be errors or omissions for which PJB cannot be responsible. It is therefore essential to take advice on specific issues.

 

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Purchase Price

This is the original or anticipated purchase price or development cost of your property.

Do not enter the current value here.

Building Type

Please provide the type of building you are looking to claim allowances on.

Note: You will be able to add further information about the type of building in the next step.

Your options here are;

  • Office.
  • Retail: Including high street, shopping centres and retail warehouses.
  • Mixed Use.
  • Industrial: Including warehouses and distribution centres.
  • Other: Leisure, hotels, casinos etc.
Building Category

Please select the description that best suits your property.

Other Information

Please provide any additional information about your property that you may consider appropriate.

Floor Area

Please enter the total floor area of the property.
You can provide either square footage or metres, but only use figures here.
The floor area you specify can either be gross or net internal space.

Floor Area Units

Please select the type of area e.g. Metres or Feet
and if the measurement has been taken as net or gross internal space.

Date of Purchase

Please enter the approximate month and year of purchase, or
if you have developed the property, please provide the
approximate date of completion.

Location Of Property

Where is the property located? Please provide town/city, and country.