Wear and Tear and Recoupments - What You Can (and Can’t) Write Off

19 Jun

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Your laptop's getting slow. That delivery van's not as sprightly as it used to be. Good news: SARS lets you turn that wear-and-tear into tax relief if you know how.

Under section 11(e) of the Income Tax Act, you can claim wear and tear allowance on movable assets used for business. That means you can write off the value of items such as laptops, tools, factory machinery, and delivery vehicles over time.

What You Can and Can't Claim

Claimable Assets:

Owned or financed machinery, furniture, electronics, and vehicles
Used in your business or trade

No-Go Zone:

Buildings and permanent fixtures
Farming gear (handled separately)
Leased or personal-use items

How Much Wear and Tear Can You Deduct?

SARS provides a handy list in Interpretation Note 47 (Issue 5) that tells you how long to write off different assets:

Laptops: 3 years
Cellphones: 2 years
Passenger vehicles: 5 years

Use the straight-line method: spread the cost evenly across the write-off period. For example, a R250,000 vehicle over 5 years = R50,000 per year. Remember to start counting the wear and tear the day the asset is brought into business, and apportion the annual allowance for the part of the year that the asset is used.

If your asset isn’t listed, you’ll need to estimate its useful life based on wear, usage, and environmental factors.

If an asset is used for both business and personal purposes, the wear-and-tear allowance must be apportioned according to the percentage of business use. Only the portion relating to trade qualifies for a tax deduction.

Valuing the Asset

Start with the cost price (excl. VAT if you claimed it). Include setup and delivery fees. For donated or second-hand items, use the market value at the time it was put into business use.

If you used an asset privately before, use the lower of cost or market value when transferring it to the business,

Full Deduction for "Small Assets"

If the item costs less than R7,000 and isn't part of a set (like one office chair, not six dining chairs), you can deduct the full amount immediately in the year of purchase.

Note: Lessors can't use this perk.

Recoupments: When Must You "Pay Back" Deductions?

If you sell, donate, scrap, or otherwise dispose of a previously depreciated asset, and the proceeds exceed the remaining tax value (book value), the difference must be added back to taxable income. Why? It is simple, you made an income by selling the item at ‘profit’ over its tax value, and this profit is taxable.

✏️ Example:

You bought a camera 2 years ago for R30,000 and claimed R20,000 depreciation over the last 2 years. The remaining tax value is R10,000. If you sell it for R15,000, you will have to add R5,000 to your taxable income as a recoupment.

Pro Tips for Accountants

Use the SARS Annexure for standard depreciation periods
Don’t start deducting until the asset is in use
Keep good records: invoices, usage, and depreciation logs
For mixed-use assets, prorate the deduction.

Don't let SARS deductions gather dust. Make sure every tool, tech, and truck pulling its weight in your business is also pulling down your tax bill.