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Here are the five documents you need to qualify for a deduction using assets depreciation

by , 09 July 2014
All of your company assets depreciate as they get older. Their value slowly but surely, works its way down to zero each year. And while this might sound like a seriously problem, it's actually a good thing.

You see, instead of losing money on that company asset each year, you can claim it back.

That's right. SARS will grant you a wear and tear allowance to cover the loss of capital from your business asset.

But first, you need to know how to qualify for it...

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Use your asset depreciation to get a tax deduction 

Your company assets depreciate at a rate of 15% each year. 
It's this amount that you lose each year that you can claim as your wear and tear allowance. 
But if you want to qualify for your allowance you need to keep all of the right documents. You need to keep these documents on hand in case SARS decide to investigate your claim.

Five documents you must keep to qualify for your wear and tear allowance

If you want your tax deductions, ensure you keep these documents:
1. An invoice that shows the date you bought the asset;
2. An invoice or a valuation report that shows the value of the asset;
3. Any documentation that shows the write-off period (or life span) of the asset. (For more information on write-off periods of assets, see the chapter on Depreciation in your copy of the Practical Tax Loose Leaf Service);
4. The income tax value of the asset from the previous year; and
5. If you sell the asset, any records, such as receipts.
If you have these five documents you can prove to SARS that you qualify for your wear and tear tax allowance. 
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