{"id":70479,"date":"2023-05-17T09:16:00","date_gmt":"2023-05-17T07:16:00","guid":{"rendered":"https:\/\/www.sage.com\/en-za\/blog\/?p=70479"},"modified":"2025-05-07T15:50:31","modified_gmt":"2025-05-07T13:50:31","slug":"asset-depreciation-how-to-claim-tax-back","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-za\/blog\/asset-depreciation-how-to-claim-tax-back\/","title":{"rendered":"Asset depreciation: How to claim tax back"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-za\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tAsset depreciation: How to claim tax back\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2023-05-17T09:16:00+02:00\">May 17, 2023<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Asset depreciation: How to claim tax back\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-za\/blog\/asset-depreciation-how-to-claim-tax-back\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-za\/blog\/author\/jasper\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/02\/Jasper--350x350.jpg\" class=\"entry-author__image\" alt=\"Jasper Basson\" \/>\t\t\t\t<span class=\"entry-author__name\">Jasper Basson<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p class=\"\">When dealing with your company&#8217;s income tax, asset depreciation is an important consideration. All assets lose value over time, something that\u2019s often referred to as \u201cwear and tear\u201d, throughout their \u201cuseful life\u201d.<\/p>\n\n\n\n<p class=\"\">Assets have a cost price and a set period of depreciation. For example, a delivery vehicle is written off over a period of four years and computer equipment over three years. SARS provides a schedule of write-off periods for various qualifying assets, which you can access <a href=\"https:\/\/www.sars.gov.za\/wp-content\/uploads\/Legal\/Notes\/LAPD-IntR-IN-2012-47-Wear-And-Tear-Depreciation-Allowance.pdf\">here<\/a>.<\/p>\n\n\n\n<p class=\"\">It\u2019s important to note that the asset for which you are claiming a tax deduction must have been used in the production of income, i.e., you can claim a deduction for the van you use to make deliveries, but not for the sports car you drive on weekends.<\/p>\n\n\n\n<p class=\"\">If you used the van for both personal and business purposes, then you need to apportion the deduction before you work out the allowance (i.e., divide it into portions: 60% business use, 40% personal use, for example).<\/p>\n\n\n\n<p class=\"\">Also, important to note is that you cannot claim a deduction on buildings or any other assets that are permanent structures.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Methods for determining the asset depreciation allowance<\/h2>\n\n\n\n<p class=\"\">There are two main methods for determining the allowance:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Straight-line method<\/h3>\n\n\n\n<p class=\"\">The most common asset-depreciation method used is the straight-line method. This is a SARS-prescribed rate applied to the cost price of the asset. It allows for a portion of the cost price to be written off as a deduction on your income statement and in your income tax calculation.<\/p>\n\n\n\n<p class=\"\">Under this method, you can claim the allowance in equal instalments over the prescribed useful life of the asset. For example, you\u2019d claim R25,000 a year for four years on your delivery van.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Diminishing value method<\/h3>\n\n\n\n<p class=\"\">With the diminishing value method, the allowance for a given year is based on how much the asset is still worth (i.e., the cost of the asset, less an allowance for the previous years of assessment).<\/p>\n\n\n\n<p class=\"\">This means that the amount you can claim every year will change in line with the asset\u2019s value in that particular year.<\/p>\n\n\n<div class=\"single-cta\">\n\t<a\n\t\tclass=\"button button--primary gate-cd515ea0-0669-4d89-8724-c891390b6bc4\"\n\t\trole=\"button\"\n\t\tdata-button-location=\"content_area\"\n\t\thref=\"#gate-cd515ea0-0669-4d89-8724-c891390b6bc4\"\n\t>Download your free copy of the rise of the virtual accountant and what it means for the finance profession<\/a>\n<\/div>\n\n\n\n\n<h3 class=\"wp-block-heading\">How to treat small assets<\/h3>\n\n\n\n<p class=\"\">Any asset that costs less than R7,000 may be written off in the year that you bought it.<\/p>\n\n\n\n<p class=\"\">SARS defines a small asset as one that:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>normally functions in its own right,<\/li>\n\n\n\n<li>does not form part of a set,<\/li>\n\n\n\n<li>and costs less than R7,000.<\/li>\n<\/ul>\n\n\n\n<p class=\"\">Tools and computers, for example, are considered small items. A table and six chairs do not. &nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Small business exceptions<\/h2>\n\n\n\n<p class=\"\">Some small businesses will qualify for various accelerated depreciation allowances.<\/p>\n\n\n\n<p class=\"\">I\u2019ll discuss three below.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Small Business Corporation<\/h3>\n\n\n\n<p class=\"\">Qualifying small businesses may opt for an accelerated depreciation rate of 50-30-20.<\/p>\n\n\n\n<p class=\"\">This means you can claim:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>50% of the allowance in the year you buy the asset,<\/li>\n\n\n\n<li>30% the following year, and<\/li>\n\n\n\n<li>20% in the third year.<\/li>\n<\/ul>\n\n\n\n<p class=\"\">This can be a huge tax break for start-up businesses.<\/p>\n\n\n\n<p class=\"\">To qualify, a company must meet several requirements:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Turnover of less than R20 million a year<\/li>\n\n\n\n<li>May not be a personal services provider (unless employing three or more non\u2013connected employees)<\/li>\n\n\n\n<li>Shareholder must hold shares in his \/ her personal capacity<\/li>\n\n\n\n<li>Shareholder may not hold shares in any other private company or close corporation<\/li>\n<\/ul>\n\n\n<div class=\"single-cta\">\n\t<a\n\t\tclass=\"button button--primary gate-cd515ea0-0669-4d89-8724-c891390b6bc4\"\n\t\trole=\"button\"\n\t\tdata-button-location=\"content_area\"\n\t\thref=\"#gate-cd515ea0-0669-4d89-8724-c891390b6bc4\"\n\t>Download your free copy of the rise of the virtual accountant and what it means for the finance profession<\/a>\n<\/div>\n\n\n\n\n<h3 class=\"wp-block-heading\">Renewal Energy Allowance<\/h3>\n\n\n\n<p class=\"\">If you install renewable energy, like solar panels, at your business, you can claim 100% back in the year that the expense occurred.<\/p>\n\n\n\n<p class=\"\">Section 12B of the <a href=\"https:\/\/sars.mylexisnexis.co.za\/\">South African Income Tax Act<\/a> makes provision for an accelerated depreciation allowance for renewable energy investments. This adds up to a massive tax break, and those panels will certainly come in handy during the next bout of loadshedding.<\/p>\n\n\n\n<p class=\"\">There is one caveat. This allowance is only applicable to first-time purchases of renewable energy assets, i.e., if you already use renewable energy, you will be unable to claim this tax break.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How to keep track of your assets and deprecation<\/h2>\n\n\n\n<p class=\"\">There are two ways you can keep track of your assets and asset depreciation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The manual way: Spreadsheets<\/h3>\n\n\n\n<p class=\"\">Create a spreadsheet with the following information columns:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Detail and cost price of each asset<\/li>\n\n\n\n<li>Book value at the begging and end of a specific period<\/li>\n\n\n\n<li>Depreciation rate<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">The modern way: Sage Online Accounting<\/h3>\n\n\n\n<p class=\"\">We use the Asset Register module in <a href=\"https:\/\/www.sage.com\/en-za\/products\/sage-50cloud-pastel-partner\/\">Sage 50<\/a> to automate depreciation calculations and processes, which means our clients\u2019 asset registers are always accurate and up to date.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Last word<\/h2>\n\n\n\n<p class=\"\">Asset depreciation is an easy way to reduce your tax bill.<\/p>\n\n\n\n<p class=\"\">Remember, you need to keep all records relating to your asset (e.g., receipts and purchase agreements) for at least five years, and until the day that you dispose of the asset.<\/p>\n \n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">[Ebook] The rise of the virtual accountant and what it means for the finance profession<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Discover how the accounting profession has evolved from one of number-crunchers to business and financial consultants.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-cd515ea0-0669-4d89-8724-c891390b6bc4\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download the eBook<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"600\" height=\"300\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2020\/08\/Fin24-Lifestyle-Image-4.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2020\/08\/Fin24-Lifestyle-Image-4.jpg 600w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice enewsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get a roundup of our best business advice in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-84fe79b5-668d-41f8-a0cc-6229018c4ac9\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-1181404518-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-1181404518-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>When dealing with your company&#8217;s income tax, asset depreciation is an important consideration. All assets lose value over time, something that\u2019s often referred to as \u201cwear and tear\u201d, throughout their \u201cuseful life\u201d. Assets have a cost price and a set period of depreciation. For example, a delivery vehicle is written off over a period of [&hellip;]<\/p>\n","protected":false},"author":1340,"featured_media":69772,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[25],"tags":[294,186,188,213],"business_type":[5],"lilypad":[],"context":[],"industry":[],"persona":[15,16],"imagine_tag":[51,361,85],"coauthors":[450],"class_list":["post-70479","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-accountants","tag-entrepreneurship","tag-expenses","tag-tax","business_type-accountants"],"sage_meta":{"region":"en-za","author_name":"Jasper Basson","featured_image":"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-1097995910.jpg","imagine_tags":{"51":"Accountants","361":"Fixed Assets","85":"Small business"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice South Africa","distributor_original_site_url":"https:\/\/www.sage.com\/en-za\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/posts\/70479","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/users\/1340"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/comments?post=70479"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/posts\/70479\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/media\/69772"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/media?parent=70479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/categories?post=70479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/tags?post=70479"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/business_type?post=70479"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/lilypad?post=70479"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/context?post=70479"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/industry?post=70479"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/persona?post=70479"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/imagine_tag?post=70479"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/coauthors?post=70479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}