Assets costing R7,000 or less per item are written off 100% in the year you first use them. Anything bigger is deducted in equal annual slices over its useful life under section 11(e) of the Income Tax Act, starting from the date the asset is brought into use. A company that qualifies as a Small Business Corporation gets far faster write-offs under section 12E.
How section 11(e) works
The write-off is straight line: cost divided by the accepted useful life equals the annual deduction. The clock starts when the asset is brought into use, not when you paid for it. Buy a compressor in August but only start using it in November, and the first year's allowance is apportioned from November. Mixed business and personal use is apportioned by business percentage, and second-hand assets are written off over their remaining useful life, not the new-asset period.
Accepted write-off periods for trade assets
SARS publishes the accepted periods in the annexure to Interpretation Note 47. Common ones:
- Laptop or computer: 3 years
- Cellphone: 2 years
- Bakkie or passenger vehicle: 5 years
- Delivery or commercial vehicle: 4 years
- Office furniture: 6 years
- Printers and scanners: 4 years
- Construction plant and equipment: 5 years
Power tools are not specifically listed in the standard annexure. Accepted practice is an estimated useful life of 3 to 5 years depending on the tool; check the current annexure to Interpretation Note 47 on the SARS Legal Counsel pages before settling on a period.
Section 12E: the SBC accelerator
If your Pty Ltd qualifies as an SBC (the tests are in Sole Prop vs Pty Ltd vs Turnover Tax), depreciation speeds up dramatically:
- Manufacturing assets: 100% write-off in the year of first use
- Other assets: 50% in year one, 30% in year two, 20% in year three
A sole prop buying R250,000 of plant deducts R50,000 a year for five years. The same plant inside an SBC gives a R125,000 deduction in year one. For a tradie investing heavily in equipment, this cash-flow difference is one of the strongest practical arguments for incorporating.
Recoupments: the sting when you sell
Sell an asset for more than its tax value (cost minus all wear and tear claimed) and the difference is recouped: added back to your taxable income. Example: a bakkie cost R250,000, you claimed R150,000 of wear and tear, and you sell it for R180,000. Tax value is R100,000, so R80,000 is recouped as income. If a sale price goes above the original cost, the slice above cost is a capital gain instead (see Capital Gains Tax Basics).
Worked example: SBC year one (2026/27)
An SBC buys a R250,000 bakkie and R80,000 of tools:
- Bakkie (non-manufacturing, 50/30/20): R125,000 deduction in year one, R75,000 in year two, R50,000 in year three
- Ten power tools at R6,000 each (each under R7,000): R60,000 deducted immediately
- R20,000 of scaffolding as a single capital item over an estimated 5 years: R4,000
Total first-year deductions: R189,000 off taxable income. The same purchases as a sole prop would yield R50,000 (bakkie) plus R60,000 (tools) plus R4,000: R114,000.
Common mistakes
- Expensing big assets in full. Anything over R7,000 per item must be spread; SARS verification catches this fast.
- Splitting invoices to duck the R7,000 line. A scaffolding set bought as one system is one asset, however the invoice is itemised.
- Forgetting the recoupment when selling or trading in a written-off bakkie. The trade-in value is taxable income to the extent of allowances claimed.
- Using new-asset periods for second-hand kit. Second-hand assets write off over remaining useful life.
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