YOU BOUGHT A THING.WHAT HAPPENS?

Where several parties draw off one physical source, the fair claim is by metered or estimated share of use, documented once in a simple usage-split agreement rather than re-argued every year.

Claim the business share only · Anyone

This is the direct parallel to splitting one fuel tank between a generator and a car, which the catalogue already covers for diesel. See also the sub-metering equipment item, which is the physical fix for this exact problem.

A new borehole at a let property is an improvement, so you cannot deduct it against the rent, but it does add to your base cost for capital gains tax later.

No deduction now, it reduces tax when you sell · Landlord

The rental deduction rules allow running costs and repairs, not the creation of something that was not there before. A first borehole is new capacity and is therefore an improvement. Keep the invoice for as long as you own the property, because it lifts your base cost and reduces the capital gain when you sell. The pump and pressure equipment are a separate question and may qualify for wear and tear against the rental income.

Drilling the hole is capital, so you cannot write it off in one year, but the pump and tank equipment can usually be depreciated.

A specific capital write-off applies · Company

Sinking a borehole creates something permanent in the ground and that part is capital expenditure, blocked by the capital exclusion in the general deduction formula. Split the invoice: the drilling, casing and civils sit in the cost of the property, while the pump, motor, pressure tank and control gear are machinery and normally qualify for wear and tear. If the borehole is a genuine building improvement to a commercial building that already qualifies for the building allowance, the cost may be added to the allowance base instead.

No tax deduction at all for a borehole at the house you live in, but keep the invoice because it adds to your base cost if the home is ever taxable on sale.

No deduction now, it reduces tax when you sell · Anyone

Nothing spent on your private residence is deductible, because there is no trade producing income. The cost is an improvement and goes into base cost. For most people the primary residence exclusion swallows the gain anyway, so the invoice may never be used. It matters if the home is worth well above the exclusion, if you have a qualifying home office area, or if you later move out and let the property.

The same borehole at a shop, office, factory or guesthouse gets no First Schedule treatment and is normally a non-deductible capital improvement to the property.

No deduction now, it reduces tax when you sell · Sole proprietor or freelancer

This is the clearest illustration of why farming is different. Outside the First Schedule, sinking a borehole is expenditure of a capital nature, so the general deduction formula is blocked and there is no wear and tear allowance for a hole in the ground. The cost generally goes into the base cost of the property for capital gains purposes instead. Removable equipment such as the pump, tank and pipework is a separate question and may qualify for wear and tear.

Farmers get a special capital development allowance for boreholes, dams and water works that other businesses do not get.

A specific capital write-off applies · Farmer

The First Schedule treats certain farming capital development expenditure, including the sinking of boreholes and wells and the building of dams and water furrows, differently from ordinary capital spending. There are limits on how much can be set off against farming income in a year, with the balance carried forward. You must be carrying on genuine farming operations, not simply owning a smallholding.

The pump and equipment that make the borehole work are farming machinery and are written off over a short period, separate from the drilling itself.

A specific capital write-off applies · Farmer

Drilling is development work under the First Schedule. The pump, motor, control box, rising main and storage tank are machinery, implements and articles brought into use for farming, which are written off on the accelerated three year basis for farmers. Keep the driller's invoice and the equipping invoice apart so each goes to the right regime.

The moving parts of a borehole, the pump, motor and pressure tank, are plant and can be written off over their useful life against business income.

Written off over time, not all at once · Sole proprietor or freelancer

Equipment that can be removed and replaced without demolishing anything is treated as machinery or plant rather than part of the structure. SARS publishes suggested write-off periods for asset classes and you should use the closest published class rather than inventing your own life. Buried pipework laid into the ground is more likely to be treated as part of the structure and therefore capital.

A borehole on a working farm is claimable as capital development expenditure under the First Schedule, which is far more generous than the normal rule that treats a borehole as pure capital.

A specific capital write-off applies · Farmer

The First Schedule to the Income Tax Act lists a specific set of farm development works, including the sinking of boreholes and wells, and lets a genuine farmer write the cost off against farming income instead of burying it in base cost. The claim is capped by reference to your farming income for the year, and the part you cannot use is carried forward to future years rather than lost. You must actually be carrying on farming operations, not just own land with water on it.

A deductible compliance and running cost, separate from the borehole's own capital treatment.

You can claim this · Sole proprietor or freelancer

Recurring testing is an ordinary running cost, not a capital item.

The rent is deductible against trade income exactly like renting anything else, but a private individual almost never issues a tax invoice, so the standard of proof shifts from a tax invoice to a written agreement, a bank trail and a receipt.

The answer turns on the facts · Anyone

A dated written agreement stating what is rented, the amount and the payment terms, an EFT reference that ties the payment to it, and a receipt from the neighbour, even handwritten, together stand in for the tax invoice that a private, non-vendor counterparty cannot issue. There is no VAT input to claim either way, because the neighbour is not a registered vendor.

Whatever a neighbour is paid for water, parking, storage or wifi is their taxable income, declarable whether or not an invoice was ever raised.

The answer turns on the facts · Anyone

What one side claims as rent and what the other side should be declaring as rental income are meant to be the same number. This item exists so the product's evidence layer treats both ends of an informal arrangement together, rather than only ever showing the payer the deduction and staying silent about the receiver's obligation.

A compliance cost distinct from the capital cost of drilling the hole itself, already listed in the catalogue.

You can claim this · Sole proprietor or freelancer

The application fee itself is a deductible compliance running cost, separate from the borehole's own capital allowance or base cost treatment.

Solar panels and inverters that run farm pumps are business assets with an accelerated write off, and there are two possible regimes so the better one should be chosen deliberately.

A specific capital write-off applies · Farmer

A solar installation used in the farming operation can fall under the farming machinery allowance or the renewable energy allowance for business, both of which are faster than ordinary wear and tear. Mounting structures, cabling and the inverter usually go with the panels. The residential solar rebate for individuals is a different thing entirely and does not apply to farm production assets.

Water is a premises running cost, but it is a weak claim because a home office consumes almost no water and SARS looks at it that way.

Claim the business share only · Anyone

Where the home office qualifies, the floor-area share of water on the municipal account is arguably claimable in the same way as rates and electricity. In practice the amounts are tiny and the connection between an office and water consumption is thin, which makes it a poor place to be aggressive. For a business that actually uses water in its trade the position is different and stronger.

The price of the land is never deductible, no matter how generous the First Schedule is about what you build on it.

No deduction now, it reduces tax when you sell · Farmer

The purchase price, transfer duty, conveyancing and bond registration costs are capital and go into base cost for capital gains tax when you eventually sell. What is deductible is the interest on the bond used to buy farming land, to the extent the land is used in the farming trade. The development works you carry out afterwards, boreholes, fencing, dams and roads, are the part the First Schedule helps with.