Proposed changes for renewable energy tax incentives

On 21 April 2023, National Treasury and SARS published draft legal amendments relating to the new two new renewable tax incentives announced in the 2023 Budget.

1. Solar Energy Tax Credit

The proposed changes are aimed at encouraging households to invest in clean electricity generation capacity to supplement the electricity supply and reduce pressure on the grid.

The tax credit will only apply to new and unused solar panels with a minimum generation capacity of 275W, connected to a residence mainly used for domestic purposes and for which an electrical certificate of compliance is issued.

The credit will be available for a period of 1 year and will apply to new and unused solar PV panels that are acquired by the individual and brought into use for the first time on or after 1 March 2023 and before 1 March 2024. Individuals will be able to claim a deduction of 25% of the cost of the solar panels, up to a maximum of R15 000.

2. Enhanced deduction in respect of certain machinery, plant, implements, utensils and articles used in the production of renewable energy

The proposed accelerated tax depreciation for assets used in renewable energy production over a two-year period increases to 125% of the cost incurred for eligible assets. This replaced the current rate of deduction of 50:30:20.

The enhanced renewable energy tax incentive will apply to wind power, solar energy, hydropower, and biomass. You can access the proposed legal amendments on Enhanced deduction in respect of certain machinery, plant, implements, utensils and articles used in the production of renewable energy here.

The proposed amendments will be deemed to have come into operation on 1 March 2023 and apply to years of assessment commencing on or after that date.

You can access the proposed legal amendments here.

Comment on the draft amendments

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