Capital Expenditure | South Africa Tax Guide

A farmer's capital expenditure is deducted either in full ( subject to certain limits) under the provisions of paragraph 12 of the First Schedule (capital development expenditure), or as a special depreciation allowance under s 12B, or as wear and tear under s 11 (e).

Capital Development Expenditure

The following expenditure is allowed as a deduction in determining the taxable income of a farmer, i.e. expenditure incurred during the year of  assessment in respect of:

(a)  the eradication of noxious plants;

(b) the prevention of soil erosion;  (a) and (b) allowances encourage the protection of the land and may be deducted in full even if an assessed loss is created. The deduction of amounts in (c) to (i) below is restricted to taxable income from farming.

(c) dipping tanks;

(d) dams, irrigation schemes, boreholes and pumping plants;

(e) fences;

(f) the erection of, or extension, additions or improvements (not repairs) to, buildings used in connection with farming operations other than those used for domestic purposes of persons who are not employees of such farmer;

(g) the planting of trees, shrubs, perennial plants for the production of grapes or other fruit, nuts, tea, coffee, hops, sugar, vegetable oils or fibres, and the establishment of any area for the planting of such trees, shrubs or plants;

(h) the building of roads and bridges used in connection with farming operations;

(i) the carrying of electric power from the main transmission lines to the farm apparatus.