Learning Unit 7 - expenditure and allowances relating to capital assets

Question 1

May a lessee deduct leaseholds improvements from their taxable income where they have not capitalized the asset? (Make reference to the relevant section)

Answer 1

In terms of section 11(g), a taxpayer that is a lessee may claim an allowance in respect to the costs incurred for leasehold improvements but only if the lessor includes the cost of these leasehold improvements in his taxable income.

Question 2

Describe section 12E, assets used by a small business corporation.

Answer 2

In terms of section 12E, the cost of new or used plant or machinery brought into use after 1 April 2001 for purposes of trade by a small business corporation, may be claimed in full in the year it was brought into use.