The tax incentive programmes for renewable energy in South Africa, including solar panel rebates for individuals and businesses is on countdown, set to end next week - 29 February.
The South African Revenue Service (SARS) has published a helpful guide detailing who is eligible for the tax credit and how to make use of it.
Introduced by Finance Minister Enoch Godongwana during the 2023 National Budget presentation, the solar tax incentive allows qualifying individuals to alleviate their tax burden by 25% of the expenses incurred on solar panels, capped at R15,000.
Meanwhile, businesses can take advantage of an initial Section 12B capital allowance that provides for accelerated depreciation of 100% of the initial costs in the year the business started using the solar system, increasing to 125%.
To qualify, individuals must have purchased, installed, and activated new and unused solar PV panels before the deadline of 29 February.
Any panels activated after this date will not be eligible for the tax credit.
Claiming the tax credit involves submitting necessary documentation to SARS during the annual tax calculation process. The guidance note specifies eligibility criteria, stressing that only panels contributing new energy to the grid qualify for the incentive.
This means only expenses related directly to solar PV panels are eligible, excluding other installation components like inverters and batteries.
Eligibility requirements include:
Panels with a generation capacity exceeding 275 watts.
Installation between March 1st, 2023, and March 1st, 2024.
Panels must be new, unused, and affixed to a domestic residence's distribution board.
An electrical compliance certificate must be obtained for the installation.
Only the individual directly incurring the panel costs can claim the tax credit.
The process for claiming the tax credit involves providing detailed information in the tax return, including the number and specifications of installed panels, proof of compliance, and purchase documentation.
Given its one-year availability, individuals need to act swiftly to benefit from this incentive, which can significantly reduce tax liabilities for the 2023/24 tax year.
Whether an extension will be announced remains uncertain, pending updates from Finance Minister Godongwana's 2024 budget speech later this week.
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