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As a business owner, which capital allowances am I entitled to on buildings that I use in my trade, if any…?

Section 13: Allowance on manufacturing buildings

In order to qualify for this allowance, the building has to be used solely or mainly (>50%) for manufacturing purposes and 100% for trade purposes.

The taxpayer claiming the allowance can either be the lessee or the owner of the building, one does not need to own the building in order to receive this allowance. Either the lessor or the lessee can receive the allowance, as long as only one of them are claiming it.

The building must either be purchased new and unused or was developed by the taxpayer himself or it was purchased second hand from somebody else who previously was allowed the section 13 allowance.

This is the only capital allowance available to buildings that do not need to be purchased new and unused by the taxpayer.

Section 13 sex: Allowance on residential accommodation buildings

In order to qualify for this allowance, the building must have been erected or acquired on or after 21 October 2008.

The buildings/units must have been acquired by the taxpayer new and unused. The taxpayer who leases these units must own at least 5 residential units in South Africa which are used for trade purposes. The taxpayer claiming the allowance must be the owner of the building/unit, this allowance is not available to lessees. The building/unit must be used 100% for trade purposes and solely or mainly for residential accommodation purposes.

Should the taxpayer only own part of a building (example sectional title), he/she will only receive 55% of the allowance. I.e. 5% of 55% of the cost price of the units/buildings which he owns.

Section 13 quin: Allowance on commercial buildings

This allowance applies to only new and unused buildings that are used 100% for trade purposes and used solely or mainly (>50%) for commercial purposes. The allowance only applies to the owner of the building and not the lessee of the building. Thus, the taxpayer who wants to claim 13 quin must own the building.

Should the taxpayer only own part of a commercial building (example sectional title), he will only receive 55% of the allowance. I.e. 5% of 55% of the cost price of the units/buildings which he owns.

Extra sections to be aware of:

Section 12N: deems any improvements made by the lessee of a building that is owned by the government to be owned by the taxpayer who affected the improvements, therefore the lessee will receive any allowance in respect of those improvements that fall under any of the section 13 allowance provisions.

Jade Els and Willem Oberholzer are Tax advisers for Probity Advisory.