SARS Asset Depreciation: Writing Off Business Assets

By Hermes

Last updated: September 21, 2026

South African businesses can claim depreciation (wear-and-tear) on assets used for income generation, reducing their taxable income.

SARS Write-off Periods

• Vehicles: 4 years (20% per year on reducing balance or 25% straight line)
• Computers and equipment: 3-5 years
• Furniture: 6-10 years
• Buildings: 20-50 years (depends on type)

Calculate your asset depreciation using our Depreciation Calculator.

Common Misconceptions About Asset Depreciation

Many South African business owners misunderstand how depreciation interacts with their tax return. A frequent error is assuming that the SARS wear-and-tear allowance is the same as the accounting depreciation shown in the financial statements. In practice the two are calculated differently, and SARS applies its own rates and rules. Claiming accounting depreciation on your tax return without following the SARS schedule can lead to an incorrect assessment and, in some cases, penalties. It is always safer to base your claim on the specific wear-and-tear tables published by SARS for your asset category.

Another misconception is that you must claim depreciation in the year you buy the asset. In reality, you can choose to claim the wear-and-tear allowance over the asset’s useful life, and in some cases you may defer the claim. There is also a common belief that once an asset is fully depreciated you can simply keep claiming. Once the cost has been written off, no further allowance is available, and continuing to claim would be incorrect. Understanding these rules helps you plan your claims accurately and avoid surprises at assessment time.

What Is a Capital Allowance?

When a business buys assets such as machinery, vehicles, computers or office equipment, it does not deduct the full cost of those assets from its taxable income in the year of purchase. Instead, the South African Revenue Service (SARS) allows the business to claim the cost over a period of years, in a process known as capital allowances, or wear-and-tear allowances. This recognises that assets are used up over time, and it spreads the tax benefit over the useful life of the asset. Understanding how capital allowances work is essential for any business owner or self-employed individual in South Africa.

The basic principle is straightforward: you claim a portion of the asset’s cost as a deduction each year, based on the asset’s expected useful life. For most movable assets, the standard wear-and-tear allowance is calculated on a straight-line basis over the asset’s useful life. For example, if you buy a machine that is expected to last five years, you can claim 20% of its cost as a deduction each year for five years. This reduces your taxable income each year, lowering the tax you pay and recognising the real cost of the asset to your business.

Different Types of Capital Allowances

SARS provides several different capital allowances to encourage investment and reflect the nature of different assets. The general wear-and-tear allowance covers most movable assets, such as machinery, equipment, furniture and computers. There are also accelerated allowances designed to encourage specific types of investment — for example, the allowance for renewable energy assets, which allows businesses to deduct the cost of solar panels and related equipment more quickly than under the standard rules. This is part of the government’s effort to encourage the adoption of renewable energy and reduce the country’s reliance on the electricity grid.

For buildings and structures used in a trade, a separate set of allowances applies, typically calculated at a different rate and over a different period. It is important to understand which allowance applies to which asset, because getting this wrong can lead to either under-claiming (paying more tax than necessary) or over-claiming (which can attract penalties from SARS). Keeping detailed records of all capital purchases, including the date, cost and expected useful life of each asset, is essential for claiming the correct allowance and defending your return if SARS ever questions it.

Depreciation vs. Capital Allowances

It is important to distinguish between accounting depreciation and tax capital allowances, as the two are not the same. Accounting depreciation is a concept used in financial statements to allocate the cost of an asset over its useful life for reporting purposes. It is an accounting estimate, and its calculation can vary depending on the accounting policy a business chooses. Capital allowances, by contrast, are set by tax law and determine how much of an asset’s cost can be deducted from taxable income in any given year. The two figures often differ.

Because of this difference, a business’s taxable income can differ from its accounting profit, and it is important to keep the two separate. When preparing your tax return, you claim the capital allowances permitted by SARS, not the depreciation recorded in your financial statements, unless they happen to align. A good accountant or tax practitioner will ensure that your capital allowances are correctly calculated and that you are claiming everything you are entitled to, which can have a significant impact on your tax liability from year to year.

Practical Tips for Claiming Capital Allowances

To get the most from capital allowances, keep a comprehensive asset register. Record every capital asset your business purchases, along with its cost, the date of purchase and its expected useful life. This register becomes the basis for calculating your annual capital allowances and is invaluable if SARS queries your return. It also helps you track which assets have been fully written off, so you can stop claiming for them and avoid errors.

Be aware of the special rules that may apply to your situation. For example, the rules for small business corporations can differ from those for larger businesses, and certain assets may qualify for accelerated or immediate write-offs. Understand the deadlines for claiming allowances and ensure you claim in the correct tax year. And remember that when you sell or dispose of an asset, there may be tax implications, including recoupments of previously claimed allowances. By staying informed and keeping good records, you can ensure you claim the capital allowances you are entitled to and keep your business’s tax position as efficient as possible.

Keeping Accurate Records for Tax Efficiency

The foundation of claiming capital allowances correctly is accurate record-keeping. Maintain a detailed asset register that records every capital asset your business purchases, including the description, the date of purchase, the cost and the expected useful life. This register is the basis for calculating your annual capital allowances and is invaluable if SARS ever queries your return. It also helps you track which assets have been fully written off, so you can stop claiming for them and avoid errors that could attract penalties.

In addition to the asset register, keep the original invoices and proof of payment for every asset. If you later sell or dispose of an asset, these records are needed to calculate any recoupment of allowances previously claimed, which is treated as income in the year of disposal. Good record-keeping not only keeps you compliant but also ensures you claim every allowance you are entitled to, reducing your tax liability legitimately. For any business owner, investing a little time in maintaining accurate records pays dividends in peace of mind and tax savings.

Getting Professional Help

Capital allowances and the broader rules of business taxation in South Africa can be complex, and the cost of getting them wrong can be significant. While the basic principles are straightforward, the application of the rules to specific assets and situations often requires careful analysis. This is where a qualified accountant or tax practitioner adds real value. They can ensure that your capital allowances are calculated correctly, that you are claiming everything you are entitled to, and that you are fully compliant with SARS’s requirements.

A good tax professional will also keep you informed of changes in the law, such as new or updated allowances, and help you plan your asset purchases to maximise your tax efficiency. They can assist with the preparation of your tax returns, respond to any queries from SARS and represent you if your return is audited. The fees paid to a competent professional are typically far less than the cost of an error, and the peace of mind they provide is invaluable. For any business with significant assets, professional tax advice is a wise investment.

Questions People Ask About SARS Asset Depreciation

Can my business claim depreciation on assets?

Yes. South African businesses can claim a wear-and-tear or capital allowance on assets used to produce income, and the allowance reduces taxable income in the year it is claimed. This is not optional bookkeeping — it is a deduction that lowers the tax you pay, so failing to claim it means paying more tax than the law requires.

Over how many years can I write an asset off?

The accepted write-off periods depend on the asset class: vehicles over four years, computers and equipment over three to five years, furniture over six to ten years, and buildings over twenty to fifty years depending on the type of structure. A machine expected to last five years can therefore be deducted at 20% of its cost each year for five years.

What is the difference between the reducing balance and straight-line methods?

Under the reducing balance method you claim a fixed percentage of the asset’s remaining book value each year, so the deduction is largest in the first year and declines thereafter. Under the straight-line method the same rand amount is claimed every year. The method that applies to your asset is set by the allowance you are using, not by preference, so the two are not interchangeable.

Which allowance applies to my business assets?

Different allowances exist for different situations: wear-and-tear applies to assets used in the production of income generally, while separate capital allowances apply to new plant and machinery brought into use for manufacturing, and further provisions cover buildings and improvements. The rates and the qualifying conditions differ between them, and claiming the wrong one can mean an adjustment and penalties on assessment. Confirm which allowance fits your asset with a registered tax practitioner before you claim it.

What records do I need to keep?

Keep the purchase date, the original cost, the allowance claimed in each year, and any subsequent improvement to the asset. SARS can call for supporting documents for several years after a return is filed, and a claim that cannot be substantiated with an invoice can be disallowed entirely. A simple fixed-asset register kept up to date is sufficient; reconstructing it years later is not.