Is a previously-occupied building disqualified from the section 13 quin allowance?

Author: SAIT Technical

Q: We bought a commercial property during the 2014 tax year. The office park was built about 5 years ago, according to the facilities manager. During the period before we bought the unit, our specific unit was occupied for 3 months.  For the remainder of the previous year, it was unused.  This formed part of a liquidated estate and we purchased the property out of this liquidated estate.

I had a look at the requirements for section 13 quin(building allowance) of the Income Tax Act, as well as the practice note on building allowances. One of the requirements for the 13 quin allowance appears to be that the property must be new or unused.  Would the fact that the property was occupied for 3 months from the time it was built and we bought it (therefore, during the 3 / 4 years prior to our purchase) be seen as it was used and therefore will not qualify for the allowance?

We are using the unit for our offices and therefore run our accounting firm from this unit. I just want to make sure that we utilise any allowance that we might be able to use, but from what I investigated, it would appear that the only applicable allowance would be section 13 quin and I am a bit uncertain as to whether we will be allowed to use this.

A: You are correct that "new and unused” does require that the building should not have been used before by either the taxpayer or any other person and if the seller had used it before then the building is disqualified. In this regard see the explanatory Memorandum on the Revenue Laws Amendment Bill 2007 at pg.45-46.

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