BGR 7 - ​Wear-and-tear or depreciation allowance

BGR 7 - ​Wear-and-tear or depreciation allowance

• 15 February 2021
• Wear and tear allowances
• SARS

Important:

This BGR applies to any asset brought into use on or after 24 March 2020.

Preamble

For the purposes of this ruling –

• “allowance” means the wear-and-tear or depreciation allowance granted under section 11(e);

• “BGR” means a binding general ruling issued under section 89 of the Tax Administration Act;

• “qualifying asset” means machinery, plant, implements, utensils and articles qualifying for the allowance;

• “Schedule” means a Schedule to the Act;

• “section” means a section of the Act unless otherwise stated;

• “Tax Administration Act” means the Tax Administration Act 28 of 2011;

• “the Act” means the Income Tax Act 58 of 1962;

• “the Note” means Interpretation Note No. 47 (Issue 5);

• “Value-Added Tax Act” means the Value-Added Tax Act 89 of 1991; and

• any other word or expression bears the meaning ascribed to it in the Act.

All interpretation notes referred to in this BGR are available on the SARS website at www.sars.gov.za. Unless indicated otherwise, the latest issue of these documents should be consulted.

1. Purpose

This BGR reproduces the parts of Interpretation Note 47 (Issue 5) “Wear-and-Tear or Depreciation Allowance” dated 9 February 2021 that comprise a BGR under section 89 of the Tax Administration Act.

2. Background

The Note is a BGR on section 11(e) in as far as it relates to –

• the determination of the value of an asset for purposes of section 11(e) (paragraph 4.2 of the Note); and

• the determination of the amount that will qualify as an allowance (paragraph 4.3 and the Annexure of the Note).

3. Ruling

The following parts of the Note, which comprise a BGR, are reproduced in the Annexure:

• Paragraph 4.2 – Value of an asset for purposes of section 11(e).

• Paragraph 4.3 – Policies on the determination of the amount of the allowance.

• Annexure – Schedule of write-off periods acceptable to SARS.

4. Period for which this ruling is valid

This BGR applies to any asset brought into use on or after 24 March 2020.

This article first appeared on sars.gov.za.

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