SARS Interpretation Note published 29th April 2024
Deductions in respect of buildings used by hotel-keepers
The note provides guidance on the interpretation and application of section 13bis, which provides for an allowance on any buildings used in the trade of hotel keeper. Section 13bis provides an annual allowance on the cost of erection of buildings or improvements to such buildings used by the taxpayer in the trade of hotel keeper.
The traditional concept of a hotel has changed in recent years. It is therefore necessary to consider the requirements of section 13bis as it applies to the modern concept of hotel-keeping. Different write-off rates apply to buildings erected or improvements effected to buildings used in the trade of hotel keeper during specified legislated periods.
In order for a taxpayer to qualify for the annual allowance, the taxpayer or the lessee must carry on the trade of hotel keeping which is defined to mean – “any person carrying on the business of hotel keeper or boarding or lodging house keeper where meals and sleeping accommodation are supplied to others for money or its equivalent”.
Therefore, to constitute hotel keeping, the taxpayer or the lessee must – carry on the business of hotel keeper, boarding house keeper or lodging house keeper and supply meals and accommodation to the patrons for consideration at the hotel, boarding house or lodging house concerned.
