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Do you know the two deductions you can claim when it comes to that company computer

by , 01 August 2014
So you just bought new computers for your company. They cost a bomb but you think they'll help improve your employees' productivity. They're faster and more efficient than your old computers.

But what happens when those new computers get old and need repairs? Well that's when you'll wish you hadn't bought the most expensive computers on the market.

Don't panic though; you can actually claim the cost of those new computers and their repairs as tax deductions. Here's how...

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You can claim the depreciation of those new computers

 
Every asset in your company depreciates in value. This means your company loses net wealth constantly. Or at least it would if SARS didn't let you claim a wear and tear allowance.
 
This tax allowance let's you claim the asset deprecation of everything in your company. 
 
So let's say those new computers cost your company R15 000 each. They have a lifespan of five years and they'll depreciate by 33.33% each year. 
 
When you use the straight line depreciation method you can deduct 33.33% or R3 000 off the value of the computers each year.
 
You can claim that R3 000 for each computer as your wear and tear allowance. 
 
 
But now what about those costly repairs?
 

You can claim a tax deduction on business repairs

 
You can claim the cost of those repairs as a tax deduction. Just ensure you don't improve or upgrade the computers in the repair process because then it isn't a repair and you can't claim it.
 
There you have it! Those new computers no longer have to give you heart palpitations thanks to these two deductions.
 
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