Broomberg on Tax Strategy (Lexis Nexis 4th
edition) has devoted entire chapter (chapter 9- pages 91 to 100) on the subject
of leasehold improvements.
In short the lessor‘s position is: he is taxed on the total amount
of the improvements which lessee is obliged to effect.
Secondly at the discretion of SARS the lessor may be granted
relief via an allowance in the year that improvements have been completed (page
92).That is, it is not spread over the period of the lease.
The effect of the relief granted is that lessor is taxed on
the present value of the improvements discounted at 6%pa (page 97).