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Four factors that influence your company's wear and tear allowance

by , 26 August 2014
A wear and tear allowance is one of the easiest ways to reduce your company's taxes. The reason is your assets always depreciate not matter what you do. So you can claim a tax deduction on that wear and tear.

But wear and tear allowances aren't a simple matter of claiming from SARS and getting your money back. It may reject your claim or even audit you it if it thinks you're trying to claim a deduction you don't qualify for.

That's why you need to ensure you get your wear and tear allowance right and watch out for four factors that'll influence your wear and tear...

 

Watch out for these four factors that'll influence your wear and tear allowance

 
1. The size of your business
You can only claim certain allowances if your business is a Small Business Corporation (SBCS). What this means for your wear and tear allowance is that SARS may reject it if your business is too big.
 
2. The industry you operate in
Farmers, manufacturing enterprises and certain building industries have their own specific allowance. This means if you try claim the wrong one, or one you don't qualify for, SARS will reject it.
 
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3. The type of assets you own
For a manufacturing company, certain allowances apply to the production plant while another allowance applies to computer equipment, officer furniture and delivery vehicles.
 
4. Initiatives that government encourage
A declaration of certain inner-city areas as Urban Development Zones has specific allowance to encourage the private sector to invest in infrastructure in these areas.
 
Now that you know the four factors that'll influences the kind of wear and tear allowance you can claim, you can ensure you don't get it wrong and land with harsh penalties.
 

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