The Minister of Finance, Enoch Gondongwana, in the 2023 national budget speech, announced the draft Taxation Laws Amendment Bill (TLAB), to give effect to certain renewable energy tax incentives. This initiative is not only aimed at households investing in clean energy generation capacity to supplement the electricity supply and alleviate the burden on the national power grid, but also to incentivize the use of renewable energy by South African households.
The draft Taxation Laws Amendment Bill introduces a tax rebate for individuals who invest in solar PV panels. For individuals to benefit from this tax incentive, there are certain requirements to be complied with.
Limited to households
Individuals who are liable to pay personal income tax will have the opportunity to claim under this specific tax rebate and thereby reduce their tax liability. The rebate is only applicable to individual taxpayers and not to businesses.
Maximum that can be claimed
Individuals will be able to claim a rebate equivalent to 25% of the costs incurred for purchasing new or unused solar PV panels, up to a maximum of R15 000.00 per individual.
To qualify for the rebate, the following requirements must be met:
- Only new or used solar PV panels, installed as an extension of an existing system or as part of a new system.
- Only solar PV panels with a minimum capacity of 275W per panel, in terms of their design output. Other components, such as batteries, diesel generators, fittings and inverters, and portable solar panels are excluded from the rebate.
- Solar PV panels must be installed at a residential property primarily used for domestic purposes.
- A Certificate of Compliance in terms of the Electrical Installation Regulations, 2009 must be provided.
- The solar panels must form part of a system that is connected to the mains distribution of the residential property.
- The rebate applies specifically to solar PV panels purchased between 1 March 2023 and 29 February 2024.
The claims process
Individuals who wish to claim the tax rebate must possess a VAT invoice that indicates the costs of the solar PV panels as a separate item, along with proof of payment, and provide a Certificate of Compliance evidencing that the solar PV panels were put into use for the first time between 1 March 2023 and 29 February 2024.
PAYE Taxpayers can claim the rebate on assessment during the 2023/24 tax season. Provisional taxpayers can claim against provisional and final payments.
Can tenants claim?
There is no ownership limitation for the incentive. Therefore, installations that meet the criteria would be eligible for the rebate but only the party that pays for the solar PV panels may claim the rebate.
The signing into law of the draft Taxation Laws Amendment Bill would be a welcome relief for overburdened taxpayers.