The proposed tax relief for alternative energy included a rebate for individuals of the lower of 25% of the cost of solar panels or a maximum rebate of R15 000 regardless of the total cost of solar panels. This means that R60,000 would be the maximum amount of total spent on solar panels to potentially get the full benefit of the proposed rebate.
It is important to note that the proposed rebate for individuals would only be available from 1 March 2023 onwards and does not apply to prior installations. The rebate is also applied on the taxable amount in a taxpayer’s tax return and it is not a cash refund into your bank account (although it may result in a refund due by SARS to you). After claiming tax credit for medical contributions and other rebates, this relief may not be available as it remains capped. If one considers that it costs approximately between R200,000 – R300,000 to be completely off the grid, the maximum rebate of R15,000 which is not much.
The solar panel rebate may assist in alleviating some pressure, but if one considers yet another administrative burden in the form of tax returns and record keeping, it is questionable who will ultimately benefit from it. One need to keep in mind that the tax break only applies to solar photovoltaic panels specifically and excludes the rest of the solar system required to generate solar power and get off the grid, such as installation costs, the cost of batteries, labour and inverters.
Treasury mentioned that provisional taxpayers can make the claim against either their provisional or final payments. For pay-as-you-earn (“PAYE”) taxpayers, the rebate will apply under the 2023/2024 filing season meaning that the rebate would, based on prior years’ filing opening, be claimed in July 2024 at the earliest.
It remains to be proven how much power there is in the proposed solar (panel) rebate, but taking the above into account, it seems to be another not-so-rosy incentive which sounded great when it was announced. We hope to be proved otherwise.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)