Non-current assets
Non-current assets are long-term resources like property, equipment and patents your business uses to earn revenue.
Published Wednesday 12 August 2026
Table of contents
Key takeaways
- Non-current assets are items a business owns for longer than 12 months to generate revenue over time, such as property, equipment, vehicles and patents.
- These assets appear on the balance sheet at their original cost minus accumulated depreciation or amortisation, giving a carrying value that reflects their remaining worth.
- In South Africa, you claim tax relief on non-current assets through section-specific capital allowances under the Income Tax Act, not a single blanket deduction.
- Tracking non-current assets accurately helps you understand business value, plan for replacements and reduce taxable profit through depreciation and capital allowances.
What are non-current assets?
Non-current assets are items a business holds for longer than 12 months to generate revenue over time. They are not easily converted to cash within a year, so they are also called long-term assets or fixed assets.
When you buy a non-current asset, you capitalise its cost on the balance sheet rather than expensing it immediately. Over the asset's useful life, you reduce its value through depreciation (for tangible items) or amortisation (for intangible items). This spreads the cost across the periods that benefit from the asset.
The 12-month threshold is what separates non-current assets from current assets. Current assets, such as cash, stock and trade debtors, are expected to be used or converted to cash within a year. Non-current assets, by contrast, support your operations over multiple years.
Types of non-current assets
Non-current assets fall into several categories, each with its own accounting treatment.
Tangible assets
Tangible assets are physical items you can see and touch. They include property, plant and equipment (PP&E) such as land, buildings, machinery, vehicles and office furniture. You record them at cost and reduce their value over time through depreciation to reflect wear and tear.
Intangible assets
Intangible assets lack physical form but still provide long-term value. Examples include patents, trademarks, copyrights, goodwill and software licences. You amortise intangible assets with a finite useful life over that period. For indefinite-life intangibles, you review them for impairment each year instead of amortising.
Natural resources
Natural resources are assets extracted from the earth, such as oil, gas, timber and mineral deposits. As you extract and sell these resources, you reduce their value through depletion, a process similar to depreciation.
Long-term investments or financial assets are also commonly classed as non-current assets. For example, if your business holds shares in another company for more than a year, those shares sit in the non-current section of the balance sheet.
Non-current assets examples
South African small businesses hold a wide range of non-current assets depending on their industry and operations.
- Land and buildings
- Machinery and manufacturing equipment
- Company vehicles
- Office equipment (computers, printers, phone systems)
- Patents
- Trademarks
- Goodwill
- Long-term investments
- Multi-year software licences
The exact mix varies by industry. A logistics business may hold mainly vehicles, while a tech startup may have significant intangible assets in software licences and patents.
Current vs non-current assets
The main distinction between current and non-current assets is how quickly they can be turned into cash and how they support your business.
- Liquidity: current assets convert to cash within 12 months; non-current assets are held for longer and are harder to liquidate quickly.
- Balance-sheet placement: current assets appear in their own section at the top of the assets list; non-current assets sit below them in a separate section.
- Value changes: current assets are usually recorded at face value or net realisable value; non-current assets are recorded at cost less accumulated depreciation, amortisation or impairment.
- Purpose: current assets fund day-to-day operations and short-term obligations; non-current assets generate revenue over multiple years.
- Examples: current assets include cash, stock and trade debtors; non-current assets include property, vehicles, equipment and patents.
It is worth noting that non-current liabilities also exist. These are obligations due beyond 12 months, such as long-term loans, mortgages and lease commitments.
How non-current assets appear on the balance sheet
Non-current assets sit in their own section on the balance sheet, typically below current assets. Each asset is recorded at its original purchase cost, then reduced by accumulated depreciation or amortisation. The result is the carrying value, also called book value.
For example, if you bought equipment for R100,000 and have claimed R30,000 in accumulated depreciation, the carrying value is R70,000. This figure appears on the balance sheet and reflects the remaining economic value of the asset.
Tracking your non-current assets accurately is easier when your accounting software lets you manage your fixed assets in one place, from purchase to disposal.
Depreciation, amortisation and impairment of non-current assets
Depreciation applies to tangible assets and spreads the cost over the asset's useful life. Amortisation does the same for finite-life intangible assets such as patents or software licences.
Common methods include straight-line (equal amounts each year), diminishing value or declining balance (higher amounts early, tapering later), and units of production (based on output or usage).
Impairment is a one-off reduction in carrying value. It applies when an asset's recoverable amount falls below its book value, perhaps because of damage, obsolescence or a decline in market conditions. Once you recognise an impairment loss, the reduced value becomes the new basis for future depreciation or amortisation.
How non-current assets are taxed in South Africa
In South Africa, you claim tax relief on non-current assets through capital allowances under the Income Tax Act administered by SARS. There is no single blanket allowance; instead, different sections apply to different asset types.
- Wear-and-tear allowance under section 11(e): movable business assets are written off straight-line over SARS-accepted write-off periods. For example, computers typically qualify for a three-year write-off, delivery vehicles four years and furniture six years. Items costing less than R7,000 may be written off in full immediately. Buildings do not qualify under this section.
- Section 12C accelerated allowance: new and unused plant and machinery used in a process of manufacture qualifies for 40% in the first year, then 20% in each of the next three years. This allowance applies only to manufacturing plant, not vehicles, software or office equipment.
- Building allowances under sections 13 and 13quin: manufacturing buildings and new commercial buildings are written off at 5% per year.
- Disposals: when you sell a non-current asset, allowances previously claimed may be recouped and taxed as income up to original cost. Any proceeds above original cost fall under capital gains tax under the Eighth Schedule to the Income Tax Act.
The accounting treatment follows IFRS or IFRS for SMEs depending on a company's public interest score under the Companies Act 71 of 2008. Tax rules and accounting standards can differ, so speak to your accountant or tax advisor about your specific situation.
Why non-current assets matter for your business
Non-current assets play a central role in building and operating a sustainable business.
- They generate revenue over multiple years, supporting your core operations and growth.
- Lenders may accept them as collateral when you apply for a loan or line of credit.
- The level of investment in non-current assets signals whether your business is expanding, holding steady or scaling back.
- Depreciation and capital allowances reduce your taxable profit, lowering your tax bill each year.
Manage your non-current assets with Xero
Keeping track of your non-current assets, their depreciation schedules and their impact on your balance sheet can be time-consuming. Xero's fixed asset management feature helps you record purchases, calculate depreciation automatically and see the carrying value of each asset at a glance. Ready to simplify your asset tracking? Get one month free and see how Xero can help your business stay organised.
FAQs on non-current assets
Here are answers to common questions about non-current assets.
What is the difference between current and non-current assets?
Current assets convert to cash within 12 months and fund day-to-day operations. Non-current assets are held for longer than a year and support revenue generation over time, such as property, vehicles and equipment.
Is a laptop a non-current asset?
Yes, a laptop is typically a non-current asset because it is used in the business for more than one year. Under section 11(e), SARS allows a three-year write-off period for personal computers.
How are non-current assets valued on a balance sheet?
Non-current assets are recorded at their original purchase cost minus accumulated depreciation or amortisation. The result is called the carrying value or book value and appears in the non-current assets section of the balance sheet.
Are non-current assets taxed in South Africa?
You do not pay tax on owning non-current assets. However, when you sell one, any previously claimed capital allowances may be recouped and taxed as income, and proceeds above original cost are subject to capital gains tax.
Why do non-current assets matter for a small business?
Non-current assets generate revenue over multiple years, can serve as loan collateral and provide depreciation or capital allowance deductions that lower your taxable profit. Tracking them accurately also gives a clearer picture of your business's overall value.
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.