Tax Focus - May/June 2023

Tax Incentives for Individuals who invest in renewable energy in South Africa

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Renewable Energy is continuing to give hope to a lot of South Africans.
What to take note

Solar panel incentive for individuals

A Draft Taxation Laws Amendment Bill (initial batch) was published which proposes an insertion of
section 6C “solar energy tax credit” in line with the announcement by the Finance Minister to introduce a tax incentive for individuals to invest in renewable energy.

The qualifying criteria

• The credit will be available only to natural persons for new or unused solar photovoltaic panels with a generation capacity of each not less than 275W, brought into use by the natural person on or after 1 March 2023 and before 1 March 2024.
• The solar panels must be installed and mounted on a residence mainly used for domestic purposes.
• The installation must be connected to the distribution board of the residence with an electric certificate issued to the natural person in respect of the installation.

How much is the credit?

The credit as announced during the 2023 Budget speech is limited to 25% of the cost of the solar panels and cannot in aggregate exceed R15 000.

Where you and your partner split the cost of the Solar panels can you both claim up to R15K?
Where the cost of the solar is split the tax credit must be apportioned with the deduction for the total cost limited to 25% of the total cost of the solar panels of R15K whichever is higher. An example where the cost is shared 50% and the total cost was R150K.

25% of 150K =R37.5K therefore higher than 15K the tax credit for the residence is therefore limited to 15K. The partners in the determination of their respective taxable income can
claim a tax credit of R7.5K each.

How will SARS potentially collect data to verify compliance of the taxpayer for Solar panels incentives?

As indicated above, to be able to claim this rebate an individual needs to have a valid invoice and certificate of compliance indicating that the panels were brought into use for the first time in the period from 1 March 2023 to 29 February 2024.

The taxpayers will be able to claim the rebate on assessments during the 2023/24 tax filing season. Provisional taxpayers will be able to claim the rebate against provisional and final

The installers will be required to submit third-party returns with the cost of the solar panels, the physical address of the taxpayer where the installation took place and the date on which the solar panels are brought into use after installation, income tax reference number or identity number for solar PV panels that were brought into use for the first time between March 1, 2023, and February 29, 2024, by May 31, 2024.