Written by Alicia
Posted 19 May 2025
Q:
If you have a small business and you buy an asset that is over R7000 eg a vehicle of R200 000 and you pay for the asset in full without financing it,
Is the full value used to reduce your business income that is taxable or do you reduce you income by only the depreciated amount?
Lastly, do vehicles also get depreciated at a 50/30/20% (over 3 years) for a small business like the other assets?
A:
For an asset like a vehicle purchased outright for business use, the full value isn't immediately deductible from
taxable income. Instead, the business can claim depreciation over time. For vehicles, the depreciation is typically calculated over five years at a rate of 20% per year. The exact amount deductible in the first year depends on when the vehicle was purchased. If it was bought partway through the year, the 20% annual depreciation should be prorated based on the number of months the vehicle was used for business that year.
Please confirm if the business qualifies as a
Small Business Corporation (SBC)? If it does, you should be able to write off the entire cost of the vehicle in the first year. If not, the standard depreciation rules would apply as mentioned above.
And our calculators:
If the business qualifies as an SBC:
If it is not an SBC:
It's also important to note that depreciation can only be claimed if the vehicle is registered in the name of the business and is used for business purposes.
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