16 April 2024
Article by Helandi Moolman, Green & You
To SOLAR or NOT to solar? Too many choices can sometimes hold you back or delay the decision. Therefore when something comes along that can make the choice more obvious, something that kicks you into action – grab the opportunity with both hands and make that decision sooner rather than later.
Case in point: solar panels and the South African government’s solar panel rebate and tax deduction. The solar rebate has in essence made the difficult choice of when, or, if at all, to purchase solar panels a no-brainer. This was the case for individual solar panel purchasers until 29 Feb 2024. Unfortunately, individual solar purchasers did not get an extension on the solar rebate.
For businesses the incentive has been extended for another financial year though, only expiring at the end of Feb 2025. Which means there is still time. Keep in mind that since the rebate for individuals was not extended, businesses probably should not bank on the business tax deduction being extended either.
If, until now you have been undecided about purchasing solar panels for your business, you still have time to jump onboard in time to qualify for the solar incentive tax deduction.
WHAT YOU NEED TO KNOW: SOLAR TAX DEDUCTION FOR BUSINESSES (basic summary)
- Businesses qualify for a 125% tax deduction in terms of section 12B of the Income Tax Act.
- Yes – that is your cost PLUS an added 25%.
- The incentive is in the form of a tax deduction and will thus reduce the tax liability of the business.
- Importantly, this is for new assets that generate electricity from renewable sources. For this article the spotlight is on PV solar energy, but other renewable energy assets also qualify for the incentive.
- The renewable asset must be brought into use for the first time between 1 March 2023 and 28 Feb 2025.
- There is no threshold or limit regarding the generation capacity of the asset.
Bottom line? Businesses have the opportunity to make a choice that offers both short-term benefits in the form of the tax deduction benefit, as well as additional long-term benefits from an operational point of view, cost-saving benefits due to rising electricity and diesel costs etc.
When weighing up the information?
Perhaps investing in a solar installation is one of the easier choices businesses are faced with these days.
What are you waiting for?