Applicants have until September 30
COMPANIES WANTING to benefit from a range of incentives announced at the launch of GEAR have only a few months left to apply.
Freight companies should remind their clients that a government grant to cover the importation of plant and machinery is one of the incentives that are being cancelled from September this year.
Lise Claasen of Deloitte and Touche taxation services in Port Elizabeth says the phasing-out of the various incentives was announced on February 17, 1999, when minister Trevor Manuel said that from September 30, 1999, applications for the tax holiday scheme and other incentives would no longer be accepted. It is thus imperative that prospective applicants apply before that date and start preparing their applications as soon as possible.
The Tax Holiday Scheme has a maximum benefit of six years.
A foreign investment grant is an additional benefit to off-shore holding companies planning to establish a South African subsidiary. The grant amounts to US$250000 and is reimbursement of transport costs in respect of plant and machinery imported into South Africa, she says.
The applicant needs to complete a form setting out its business plan and financial projections, before the September deadline, says Claasen.
The accelerated depreciation allowance is another tax benefit relating to the Minister of Finance's GEAR policy. This allowance grants manufacturers the opportunity to depreciate their plant and machinery used in a process of manufacture over three years, provided:
¥ the plant or machinery is acquired and brought into use by September 30, 1999, or
¥ the plant or machinery are acquired by the client in terms of a written agreement signed by September 30, 1999, and brought into use by no later than March 31, 2000.
The allowance also allowed for a more expedient write-off of buildings or improvements thereto. The erection of the building or the effecting of the improvements must have commenced by September 30, 1999, and the building or improvement must be brought into use by March 31, 2000.
Manufactures should thus take note of this limited window of opportunity and any planned acquisition of new plant or machinery or erection of any new building or improvements should be carefully managed to ensure that they can take advantage of the accelerated allowances, she says.
