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You're entitled to claim 28% of your bad debt!
Discover how Greg got R22 400 from SARS for his company's bad debt so you can do the same...
Plus discover 46 other ways to get your money back from SARS through allowances and deductions.
Read on to find out more!
What is a scrapping allowance?
It's an allowance you can claim when you sell a business asset, someone steals it, you lose it or it's destroyed, say in a fire.
But you can only claim this allowance on any business asset that has a 'useful life' of less than 10 years and if what you get for it is less than the net tax value. The net tax value is what you paid for it less any wear and tear allowance you've claimed on the asset.
But be careful, don't try claim a scrapping allowance if you're closing your business and selling everything off. Or have gone into liquidation and need to sell all your assets! SARS won't allow it!
Now let's have a look at how you can qualify for this allowance.
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3 Criteria you must meet to qualify for the allowance
You must be disposing of the asset. This means it's being sold, has been written off, destroyed or is worn out, like your printer.
'Worn out' doesn't necessarily mean that the asset is completely useless. As long as you've decided it's so old you can't use it in your business anymore, it will qualify.
The asset must have qualified for a capital allowance. The capital allowances are:
· Wear and tear
deductions for the depreciation of the asset;
· Deductions on the wear and tear of manufacturing assets (e.g. production machinery) and assets used in hotels (e.g. industrial washing machines); or
· Deductions for assets of a small business corporation, for example your printer.
You MUST have claimed one of these capital allowances on the asset
If so, then you can claim the scrapping allowance.
For the formula and practical example on how to calculate your scrapping allowance, get your copy of the Practical Tax Loose Leaf now.
How many of the tax allowances and deductions available to your business do you actually use? Well, here are 31 tax deductions you can use. Find them here.