Capital Incentive Allowances
| ASSET TYPE | CONDITIONS FOR ANNUAL ALLOWANCES | ANNUAL ALLOWANCES |
|---|---|---|
| Industrial Buildings | Cost of buildings or improvements, provided building is used wholly or mainly for carrying on a process of manufacture or similar process | Either 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 cost | Year 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 cost | Year 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 developer | Year 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 Buildings | Cost of portion of building or improvements used | 5% |
| Improvements that do not extent the exterior framework of the building | 20% | |
| 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 trade | 55% × 5% of the cost | |
| Taxpayer acquires part of a building that has new and unused improvements to be wholly or mainly used for producing income | 30% × 5% of the improvement | |
| Aircraft & Ships | Must be used for purposes of trade | 20% |
| Plant & Machinery | New or unused manufacturing assets | 40% in 1st year 20% in each of the 3 subsequent years |
| Plant & machinery | New and unused plant or machinery used by the taxpayer directly in a process of manufacture by a Small Business Corporation | 100% 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 MW | 100% of cost 100% of cost |
| Residential Units – at least five units must be owned | New & 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 on | Normal 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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