Wear & Tear Calculator

Wear-and-tear (also called depreciation, capital allowance, or write-off) is the tax deduction you claim for the gradual decline in value of business assets. It’s authorised by Section 11(e) of the Income Tax Act, and the standard write-off periods come from SARS Interpretation Note 47.

The principle: when you buy a R30,000 laptop for the business, you don’t deduct the full R30,000 against this year’s income. The asset has a useful life of three years, so SARS lets you deduct R10,000 each year. By year three the laptop is fully depreciated; the deduction is exhausted, even if the laptop still works.

This is purely a tax timing mechanism — the total deduction equals the asset cost either way. But spreading it across the useful life matches the deduction to the period the asset actually generates income, which is the core tax-accounting concept of matching.

Land is never depreciable — it doesn’t lose useful life. Buildings on the land are depreciable, but at the slow 5%-a-year rate (and only commercial / industrial buildings; residential rental property uses Section 13sex instead).

SARS uses the straight-line method as the default. The asset cost divided by the useful life gives equal annual deductions:

The diminishing-balance (or reducing-balance) method front-loads the deduction — bigger write-off in year 1, smaller in year 5 — and is occasionally elected by taxpayers under BGR 7 for assets that genuinely lose value faster early on. Most accountants stick with straight-line because it’s simpler and SARS audits it less aggressively.

Note the apportionment in the year of acquisition. SARS only allows you to deduct the portion of the year the asset was actually in use — buying on the last day of February gives you a deduction of zero for that year and shifts the schedule by 12 months. Plan large purchases early in the tax year if cash flow allows.

You can only deduct the business-use portion of an asset’s wear-and-tear. This bites hardest on vehicles. If you use a R400,000 bakkie 70% for business and 30% for personal trips, your annual deduction is:

Keep a contemporaneous logbook — SARS will request it on audit. Round-numbered guesses (“about 70%”) are routinely disallowed; an electronic logbook app or a written diary that shows odometer readings on the first and last day of each trip is the audit-proof way.

If your business qualifies as a Small Business Corporation under Section 12E, you get accelerated wear-and-tear under Section 12E(1A):

• Manufacturing plant and machinery (new and unused) — 100% in year 1. The full cost is deductible immediately, no spreading. Used machinery reverts to standard wear-and-tear. This is a serious incentive for asset-heavy small manufacturers buying new kit.
• All other depreciable assets (new and unused) — 50/30/20 over 3 years. 50% in year 1, 30% in year 2, 20% in year 3. Faster than the standard 3-year computer schedule and far faster than the 5-year vehicle schedule. Used assets use the standard schedule.

Turnover-tax registered micro-businesses get nothing — they don’t deduct expenses at all under the Sixth Schedule, so wear-and-tear doesn’t apply. That’s why high-margin services thrive on turnover tax but asset-heavy businesses prefer SBC.

When you sell, scrap, or donate a depreciated asset, the difference between the sale price and the tax book value (cost less accumulated wear-and-tear) is recoupment under Section 8(4) — taxed as ordinary income, not as a capital gain:

• Sold above book value but below original cost → recoupment of the wear-and-tear claimed; full amount included in taxable income.
• Sold above original cost → full recoupment plus the excess is a capital gain (CGT applies).
• Sold below book value → scrapping allowance under Section 11(o) for the shortfall.

Practical tip: don’t buy a fully-depreciated company asset off the company at R1. SARS will deem the sale to be at market value and recoup the difference, plus there are likely fringe-benefit and donations-tax angles too. Sell at fair market value or keep the asset on the books.

Pick the asset category, enter the cost and how many years you’ve owned the asset, and the calculator applies the Interpretation Note 47 useful life to compute:

• The annual straight-line deduction.
• The remaining tax book value (cost less cumulative deductions).
• The full year-by-year depreciation schedule.

The result is for a 100%-business-use asset. Multiply the annual deduction by your actual business-use percentage to get what you can claim. The calculator doesn’t apply SBC accelerated allowances or year-of-acquisition apportionment — those are edge cases that need a tax practitioner to model alongside the rest of the return.

• SARS — Interpretation Note 47 (Wear-and-Tear or Depreciation Allowance)
• SARS — Section 11(e) capital allowances
• SARS — Binding General Ruling 7 (diminishing-balance method)
• Income Tax Act — Sections 11(e), 12E, 8(4)