Grants & Incentives

Grants & Incentives

Tax Incentive: Depreciation

As per the Income Tax Act 58 of 1962, Part 12B – Deduction in respect of certain machinery, plant, implements, utensils and articles used in farming or production of renewable energy

Extract from Subsection (2)
The deduction contemplated in subsection (1) shall be calculated on the cost to the taxpayer of the asset, as referred to in subsection (3), and the rate of the allowance shall be –
a) in respect of the year of assessment during which the asset is so brought into use, 50 per cent of such cost;
b) in respect of the second year, 30 per cent of such cost; and
c) in respect of the third year, 20 per cent of such cost

As from 1 January 2016 Section 12b of the Income Tax act (South Africa) was amended from a three year (50% – 30% – 20%) accelerated depreciation allowance on renewable energy to an even quicker depreciation allowance of ONE year (100%).