Homeowners who have forked out hundreds of thousands of rand on solar panels to mitigate load shedding, qualify for a rooftop solar tax incentive.
The government recently introduced a R9 billion tax relief programme to support plans for clean energy transition, increase electricity supply and limit the impact of high fuel prices.
The 2023 Budget Review report indicates that while R4 billion in relief was provided for households that install solar panels, R5bn was provided to companies through an expansion of the renewable energy incentive.
Last month, Finance Minister Enoch Godongwana explained how individuals could receive a tax rebate to the value of 25% of the cost of any new and unused solar PV panels.
“To qualify, the solar panels must be purchased and installed at a private residence, and a certificate of compliance for the installation must be issued from 1 March 2023 to 29 February 2024. The rebate is only available for PV solar panels and not batteries or inverters.”
Godongwana said the rebate could be used to offset the homeowner’s personal income tax liability for the 2023/24 tax year, up to a maximum of R15 000 an individual.
For example, if a person purchases 10 solar panels at a cost of R40 000, they can reduce their personal income tax liability for the 2023/24 tax year by R10 000.
The minister said changes to the Bounce Back Loan Guarantee Scheme were also proposed incentivised renewable energy, rooftop solar, and address energy-related constraints experienced by small and medium enterprises.
“Government will guarantee solar-related loans for small and medium enterprises on a 20% first-loss basis. National Treasury will launch the Energy Bounce Back Scheme in April 2023,” Godongwana added.
A tax incentive is also available for businesses, with the incentive allowing for businesses to deduct the costs of qualifying investments over one or three years, creating a cash flow benefit in the early years of a project. There will be no thresholds on the size of the projects that qualify and the incentive will be available for two years.
“Businesses are able to deduct 50% of the costs in the first year, 30% in the second and 20% in the third for qualifying investments in wind, concentrated solar, hydropower below 30 megawatts (MW), biomass and photovoltaic (PV) projects above 1 MW. Investors in PV projects below 1 MW are able to deduct 100% of the cost in the first year. Under the expanded incentive, businesses will be able to claim a 125% deduction in the first year for all renewable energy projects with no thresholds on generation capacity.”
Godongwana added that the adjusted incentive would be available for investments brought into use for the first time between 1 March 2023 and 28 February 2025.
He said that for a business with positive taxable income, the deduction would reduce its tax liability. For example, a renewable energy investment of R1 million would qualify for a deduction of R1.25m.
IOL