In brief
The 2023 Budget proposes a solar panel tax incentive (available for a period of one year) for individuals installing solar panels at private residences.
Budget proposal
Budget 2023 proposes an incentive to encourage households to invest in clean electricity generation capacity which can supplement electricity supply.
Individuals who pay personal income tax and install new and unused solar photovoltaic (PV) panels can claim a rebate to the value of 25% of the cost of these panels, up to a maximum of R15,000, against their tax liability.
The rebate applies to qualifying solar PV panels that are brought into use for the first time in the period from 1 March 2023 to 29 February 2024.
National Treasury provided further details on the requirements and claims process in a Frequently asked questions publication.
Additional requirements
- Must be new and unused solar PV panels.
- The panels can be installed as part of a new system, or as an extension of an existing system.
- Solar PV panels must have a minimum capacity of 275W per panel (design output).
- Other components of a system (e.g. batteries, inverters, fittings or diesel generators) and installation costs do not qualify.
- Portable panels do not qualify.
- Solar PV panels must be installed at a residence that is mainly used by an individual for domestic purposes.
- An electrical certificate of compliance will be required.
- The solar PV panels must form part of a system that is connected to the mains distribution of the private residence.
Claims process
As there is no ownership limitation for the incentive, installations by both landlords or renters would be eligible, but only the party who pays for the solar panels can claim the rebate. Currently, a body corporate will not be able to claim this incentive. However, the government will be consulting on this aspect.
Individuals will be able to claim the rebate if they have:
- a VAT invoice that indicates the cost of the solar PV panels separately from other items, along with proof of payment, and
- a Certificate of Compliance evidencing that the solar PV panels were brought into use for the first time in the period from 1 March 2023 to 29 February 2024.
PAYE taxpayers will be able to claim the rebate on assessment during the 2023/24 filing season. Provisional taxpayers will be able to claim the rebate against provisional and final payments.
Other considerations
There will be no recoupment for income tax purposes if the individual sells the residence after having benefitted from this incentive.
However, the rebate will be subject to a claw-back provision for income tax purposes if the individual sells the actual panels within one year after they were first brought into use.