HomeHome SearchSearch MenuMenu Our productsOur products

Three things to remember when claiming your wear and tear allowance

by , 10 July 2014
Wear and tear allowances are very handy when it comes to decreasing your tax bill. The reason: All of your business assets depreciate. That means you'll always have wear and tear on those assets to claim back from SARS.

But to ensure SARS won't reject your claim you must get all your depreciating ducks in a row. If you don't, SARS will put your claim in the bin and maybe even charge you penalties.

So before you go to SARS with your hand out, remember these three things...

*********** Top rated product  ***************
You have one Capital Gains Tax lifeline
 
It'll give you secrets most businesses will never know and help you avoid paying crippling taxes every single year.
 
*****************************************

You can claim your wear and tear allowance only after you've remember these three things

 
A wear and tear allowance works like this: Each year your assets depreciate at a set rate. You then take the amount of money you lost in the asset depreciation and claim it from SARS as a tax allowance.
 
But to do that you must remember:
 
You need to use the asset's lifespan to calculate the rate of depreciation. For example, a computer that cost R20 000, has a life span of three years and deteriorates at a rate of 33.33%. This means at the end of those three years its book value is zero.
 
'Straight line' and 'reduce the balance' are both depreciation methods. If you want to save more on your tax, the Practical Tax Loose Leaf Service suggests you use the straight line method. It's better because it gives you the same amount of depreciation each year. 
 
          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. 
          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 remember to use these things to calculate depreciation correctly and prove it, you'll be able to claim that cash back off your income tax.
 
*********** Advertisement ************
Be invisible to SARS
 
Six reasons SARS will audit you...
 
***********************************

Vote article

Three things to remember when claiming your wear and tear allowance
Rating:
Note: 5 of 2 votes


Related articles




Related articles



Related Products