TAX MATTERS: Capex rebasing: Good policy that needs tweaking

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Capital allowances are incentives granted to taxpayers incurring expenditure on business assets. They are available on qualifying capital expenditure incurred on the provision of certain assets to be used in the production of income or for the purposes of trade.
There are of two types, namely Special Initial Allowance (“SIA”) and Wear & Tear (“W&T”). With SIA the expenditure is claimed over a period of four years for big businesses and in three years for SMEs. It is claimed upon election by the taxpayer.

Immovable property should have been constructed by taxpayer and asset must be used at least 90 percent in the production of income.
W&T is granted in all cases where SIA has not been granted and computed on the written down value (tax value) of the asset for movable assets and on cost for immovable property. Under W&T the asset write off period is 10 years.