YOU BOUGHT A THING.WHAT HAPPENS?

A barn, grain store or silo used to store your own produce is farm development expenditure, though a bolted steel silo may instead be plant.

A specific capital write-off applies · Farmer

A fixed structure erected for the farming operation falls in the development basket. A demountable silo or bulk bin that is really equipment can be treated as farming machinery on the faster write off, which is often better because it escapes the development cap. Look at what the thing actually is, not what it is called on the quote.

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.

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.

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 bridge or crossing built so the farming operation can move across water is First Schedule capital development expenditure.

A specific capital write-off applies · Farmer

Bridges sit with roads in the development list. As always, the deduction in a year is limited by farming income and the excess carries forward. If the crossing is shared with neighbours or a municipality, only your share of the cost is yours to claim.

A commercial building bought for your business is written off over many years under the commercial building allowance, and only if it is new and unused when you get it.

A specific capital write-off applies · Company

The commercial building allowance gives an annual write off on the cost of a building or improvement used in producing income in the course of trade, but it is restricted to buildings that were new and unused when acquired or erected. Buying an existing second hand office block generally does not qualify, which surprises most buyers. There are separate older regimes for industrial buildings and for buildings in urban development zones, so the exact regime depends on the building and where it is.

Clearing and preparing land for cultivation, and eradicating invasive or noxious plants, is on the First Schedule capital development list.

A specific capital write-off applies · Farmer

This covers stumping, grubbing, removing bush and the initial preparation of land for planting, as well as the eradication of noxious plants. It is one of the clearest cases where farming beats ordinary business rules, because for anyone else this is straightforward capital improvement of land with no deduction at all.

A harvester is farming machinery on the accelerated write off, but if you contract it out to other farmers part of the income is not farming income.

A specific capital write-off applies · Farmer

The allowance itself is straightforward. The complication is contracting: harvesting for neighbours for a fee is generally a separate service trade, which affects both the apportionment of the asset and the farming income figure that caps your capital development expenditure claim.

The rig is a depreciable asset if it runs a genuine trade; the electricity is deductible against the mining income on the same apportioned-usage logic as the generator already in the catalogue.

A specific capital write-off applies · Sole proprietor or freelancer

Whether mining income is revenue or capital in nature follows ordinary trading principles, not a crypto-specific rule; SARS treats crypto income under existing gross income and CGT concepts.

Constructing a dam on a farm is listed capital development expenditure and is claimable against farming income under the First Schedule.

A specific capital write-off applies · Farmer

Dams, water furrows and similar water works appear in the First Schedule list of qualifying development expenditure. The same annual cap by reference to farming income applies, with the excess carried forward. Repairs to an existing dam wall are a different question and are usually an ordinary repair deduction rather than development expenditure.

The cost of getting power onto the farm and carrying it to where it is used is on the First Schedule capital development list.

A specific capital write-off applies · Farmer

Carrying electricity from one point to another for the farming operation qualifies, which covers the reticulation to pump stations, sheds and lands. A connection fee paid to the utility, and any contribution to their infrastructure, should be tested separately because it may be a service charge rather than your asset.

Buildings erected for the farming operation are claimable under the First Schedule, which is a much better outcome than the slow building allowances an ordinary business gets.

A specific capital write-off applies · Farmer

The development list covers buildings used in connection with farming operations, other than a dwelling house not occupied by farm employees. So an implement shed, workshop, dairy, chicken house or piggery generally qualifies. The farmhouse you live in does not.

Building roads on the farm for the farming operation is listed First Schedule capital development expenditure.

A specific capital write-off applies · Farmer

Construction of roads used in the farming operation qualifies. Regravelling and grading an existing road each year is more naturally an ordinary repair or running cost, deductible in full without the development cap.

Fencing a farm is capital development expenditure under the First Schedule and is claimable against farming income, unlike fencing at an ordinary business.

A specific capital write-off applies · Farmer

Erecting fences, including internal camp fencing and boundary fencing used in the farming operation, is on the First Schedule list. Repairs to existing fencing are usually an ordinary repair deduction instead, which is often better because a repair is not subject to the development expenditure cap.

A generator used in the farming operation is farming machinery and is written off on the accelerated basis, with the running diesel deductible as you use it.

A specific capital write-off applies · Farmer

The unit itself is an asset. The diesel, servicing and filters are ordinary running costs deductible in the year. A generator that keeps the farmhouse on during load shedding is private, and one that does both should be apportioned on a defensible basis such as connected load or hours.

Homes built on the farm and occupied by farm employees are claimable development expenditure, unlike the farmer's own house.

A specific capital write-off applies · Farmer

The First Schedule allows expenditure on dwellings occupied by employees engaged in the farming operation. There is a per dwelling limit in the legislation, so a large or high specification house may only be partly claimable, and the amount has been changed over the years. The house must actually be occupied by employees, not standing empty or let to outsiders.

Farm implements get the same accelerated write off as the tractor that pulls them.

A specific capital write-off applies · Farmer

Implements, utensils and articles brought into use for farming qualify. Small tools and low value items may be written off in full under the small item practice rather than capitalised. Second hand implements qualify on what you paid, and if you bought from a non vendor there may also be a notional VAT input if you are registered for VAT.

If your lease obliges you to improve the premises, you can write the cost off over the lease period, but the landlord may be taxed on the value of what you built.

A specific capital write-off applies · Company

Where a lease requires the tenant to effect improvements, the tenant gets an allowance spread over the period of the lease rather than an immediate deduction, and the lease term used for this purpose is capped. The mirror side is that the landlord may have to include the value of the improvements in income. Voluntary improvements not required by the lease sit in a different and less favourable position.

Irrigation equipment on a farm is claimable, but which regime applies depends on whether the item is fixed development work or movable farming machinery.

A specific capital write-off applies · Farmer

Buried mainlines, canals and permanent water reticulation tend to be First Schedule capital development expenditure. A centre pivot, pump station, filters and drip lines are machinery and implements used in farming and fall under the accelerated farming asset allowance. The two regimes have different limits: the development expenditure claim is rationed against farming income, the machinery allowance generally is not.

The cost of establishing an orchard or vineyard, including the young trees or vines, is treated as farm capital development expenditure rather than being locked up until you sell the farm.

A specific capital write-off applies · Farmer

The First Schedule development list includes the planting of trees, shrubs and perennial plants grown for fruit, nuts and similar produce, and the establishment of the area planted. Trellising, supports and irrigation within the block may fall under either development expenditure or farming machinery depending on what it is, so itemise the establishment budget. The annual cap against farming income matters a lot here, because establishment is front loaded and income only arrives years later.

Works to prevent soil erosion, including contour banks and stormwater control on the lands, are listed First Schedule capital development expenditure.

A specific capital write-off applies · Farmer

Soil conservation works are one of the categories the First Schedule specifically encourages. Ordinary maintenance of existing contours each season is more naturally a running cost and is deductible in full, which is usually the better answer where it applies.

This is the real one: solar generation assets used in a business get an accelerated capital allowance, and small scale plant is written off in full in the first year.

A specific capital write-off applies · Sole proprietor or freelancer

Section 12B gives an accelerated write-off for machinery and plant used by the taxpayer in the production of income for generating electricity from renewable sources. Solar photovoltaic plant below a defined generation capacity threshold is written off entirely in the year it is brought into use; larger installations are spread over a short period rather than the normal wear and tear life. A temporary enhanced version of the allowance (s12BA) also existed for assets brought into use in a limited window: confirm whether your bring-into-use date falls inside it. This is a genuinely different regime from the individual rebate in R-SOL-001 and the two must not be mixed up.

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.

A tractor used in farming is written off over a short accelerated period, much faster than ordinary business plant.

A specific capital write-off applies · Farmer

Machinery, implements, utensils and articles brought into use by a farmer for farming purposes get an accelerated write off. If you buy on instalment sale, you claim the allowance on the cost of the tractor and the finance charges separately as interest, not the monthly instalment. When you trade it in or sell it, a recoupment of the allowances claimed comes back into income.

Furrows, canals and the works that carry water to the lands are named in the First Schedule development list and are claimable against farming income.

A specific capital write-off applies · Farmer

This includes the works that lead water from the source to where it is used in the farming operation. As with all First Schedule development expenditure, the deduction in any one year is limited by reference to your farming taxable income, and the balance carries forward indefinitely against future farming income.

A weir built to hold or divert water for farming falls in the same First Schedule capital development basket as a dam.

A specific capital write-off applies · Farmer

Weirs sit alongside dams and water furrows in the First Schedule development list. Practically, the water use licence and environmental authorisation costs that go with a weir are a separate question and are more likely an ordinary deduction or capital, depending on what they secure.

Wind and hydro generation plant used in a business falls under the same accelerated renewable energy allowance as solar.

A specific capital write-off applies · Sole proprietor or freelancer

The renewable energy allowance is not solar-specific. It covers plant used in the production of income to generate electricity from wind, hydropower and biomass as well, with different capacity thresholds and write-off patterns depending on the source and size. Because the categories and thresholds differ by technology, this one needs to be read against the section for your specific installation rather than assumed to match solar.