Time is Running Out: Take Advantage of South Africa's Solar Tax Break Now!

Feb 14, 2024

In a significant move to promote sustainable energy solutions among South African households, the Minister of Finance announced a new solar panel tax incentive on 22 February 2023. This initiative is designed to encourage individuals to invest in clean electricity generation, supplementing the country's electricity supply and supporting the government's climate objectives. Here's everything you need to know about this incentive, how it works, and how you can benefit from it.

Objective of the Incentive

The primary goal of this incentive is to motivate households to invest in solar energy by offering a financial rebate for the installation of new and unused solar photovoltaic (PV) panels. This initiative is available for a limited time, from 1 March 2023 to 29 February 2024, to encourage immediate action.

Who Can Claim?

The rebate is available to individuals who pay personal income tax and are installing solar panels at their residential properties. This incentive is not applicable to solar installations at business premises, which are covered under a separate renewable energy tax incentive for businesses.

What Can Be Claimed?

Individuals can claim a rebate of 25% of the cost of new and unused solar PV panels, up to a maximum of R15,000 per individual. For example, if you purchase solar panels costing a total of R40,000, you can claim a rebate of R10,000. The incentive is designed to make solar energy more accessible and affordable for South African households.

Requirements for the Incentive

  • Eligible Products: Only new and unused solar PV panels with a minimum capacity of 275W per panel qualify for the rebate. The incentive does not cover other system components such as batteries, inverters, or installation costs.
  • Installation: The solar panels must be installed at a residential property used mainly for domestic purposes. A certificate of compliance in terms of the Electrical Installation Regulations, 2009, is required to prove the installation's safety and compliance.
  • Connection: The solar PV panels must be part of a system connected to the mains distribution of the private residence.
  • Timing: The rebate applies to qualifying solar PV panels brought into use for the first time between 1 March 2023 and 29 February 2024.

How to Claim the Incentive

To claim the rebate, individuals must provide a VAT invoice indicating the cost of the solar PV panels separately from other items, along with proof of payment, and a Certificate of Compliance. PAYE taxpayers can claim the rebate on assessment during the 2023/24 filing season, while provisional taxpayers can claim against provisional and final payments.

Why Focus on Solar Panels?

The government's decision to focus on solar panels, excluding diesel generators, inverters, batteries, and installation costs, aligns with its commitment to sustainable energy solutions and climate objectives. Solar panels directly contribute to additional generation capacity, maximizing the use of limited government funds towards achieving a greener future.

Impact on Renters and Sectional Titles

The incentive is also accessible to renters and individuals living in sectional titles or body corporates, provided they pay for the solar panels. This inclusivity ensures that a broader segment of the population can benefit from solar energy, contributing to the country's sustainability goals.

Legislative Process

This incentive will be included in the annual tax amendments, with a draft version of the legislation to be published for public comment. The aim is to provide clarity and encourage investment in solar energy without waiting for the tax bills later in the year.

The solar panel tax incentive represents a significant step towards promoting renewable energy in South Africa. By understanding and taking advantage of this initiative, households can contribute to a sustainable future while enjoying the financial benefits of clean energy.