Finance Minister Enoch Godongwana announced during his budget speech that South Africans who pay personal income tax can receive up to R15,000 in tax rebates for solar panels starting from 1 March. The rebate will be applicable for solar Photovoltaic (PV) panels brought into use for the first time from 1 March 2023 to 29 February 2024.
Solar energy is increasingly being considered a viable solution to the issue of load shedding in South Africa. However, experts advise that solar installations should be cost-effective, compliant, and meet the homeowner’s needs.
To claim the rebate, individuals need to have a VAT invoice that indicates the cost of the solar PV panels separately from other items, proof of payment, and a Certificate of Compliance issued by a certified and competent professional. The rebate only applies to new and unused solar PV panels with a minimum capacity of 275W per panel (design output). Components of solar systems such as batteries, inverters, fittings, and installation costs do not qualify. Diesel generators are also excluded from the qualifying rebate criteria.
While solar is a cost-effective solution, it is not affordable for many South Africans. Prospective buyers must perform a needs assessment, investigate costs, and enquire as to financing options. Buyers should also carefully investigate suppliers of solar to ensure that they comply with regulations, are accredited, and use high-quality materials.
Looking forward, consumers who upgrade or change to solar may sell surplus energy generated back to the grid. This may provide a small return on their investment. The Western Cape is forging ahead with this possibility, with other Provinces in discussions to follow suit.
This incentive will be included in the annual tax amendments. A draft version of the legislation will be published for public comment no later than the publication date of the 2023 Draft Taxation Laws Amendment Bill. Tax bills are tabled by the Minister during the Medium-Term Budget Policy Statement (MTBPS) in October each year. Parliament considers the amendments after which the President can assent to the amendments. This is typically concluded by January of the year following the announcement.
A useful Frequently Asked Questions guide to the solar panel tax incentive can be found on treasury’s site at bit.ly/3KYdLxm.
Sabinet will also make all new amendments available to its subscribers as soon as these are published.