A Guide to South Africa’s new solar powered tax laws.

With the rise in loadshedding levels, inverter sales going through the roof and Eskom still struggling to cope with the energy demands, SARS has come to the table with two tax incentive programs for the people of South Africa. One program incentivizes individuals coming off the grid and the other speaks to businesses and corporations. Here is a run down of the “need-to-knows” behind the incentives and the clauses you might fall trap to. 

The Solar Power Incentive Scheme for Individuals

Individuals who install solar panels to their personal rooftops within the time period of 1 March 2023 – 29 February 2024, are eligible to claim the tax incentive from SARS. These individuals are able to receive up to 25% of the cost of their solar panels back, up to a maximum tax-back of R15 000. 

Clauses Individuals need to Know

Unfortunately, many individual solar-powered homeowners have found themselves unable to claim this tax rebate from SARS due to a select few clauses to the incentive. SARS has outlined the time period, and will not budge on this frame – if an installation was pre- 1 March 2023 or is post- 29 February 2024, the incentive will not count. Similarly, batteries and inverters do not count as eligible for the scheme, with only PV panels qualifying.,. The solar panels have to be new and unused in order to qualify for the incentive scheme, they must be of a certain minimum capacity per panel and need to be installed for domestic use for the individual’s residence. 

The Solar Power Incentive Scheme for Businesses

SARS has put together an open-ended tax incentive for businesses who claim tax back for their solar installations. These businesses are able to claim 15% VAT return on the installation. This incentive scheme has recently increased from an accelerated depreciation of 100% of the initial cost to 125% in March 2023, with no upper limit to the total installation costs claimable.

Clauses Businesses need to Know

As with individuals, businesses need to abide by a certain set of strict rules in order to claim the highest value back. The tax rebate will only qualify for the initial installments of the solar energy system, meaning businesses need to install what they are likely to need further into the future as add-ons and upgrades won’t be claimable.  

Do you want to claim for solar installation?

If you have any questions, need help understanding the ins and outs of this new tax incentive, contact us at info@smithandrossi.com, via our website, or on social media.