Loadshedding and tax deductions

by Madeleen van Schalkwyk | July 11, 2023

loadshedding and tax deductions
What is good, what is bad, who knows best? South Africans are faced with constant loadshedding on a daily basis, but there is one thing that makes us unique. We will always find a solution to any problem. Solar is currently the number one topic on everybody’s lips! The question is thus, are there any Tax savings?

SARS recently announced the 2023 tax season opens on 7 July 2023. You will notice some of the following tax changes:

  • Corporate tax rate changed to 27% for tax years ending 31 March 2023
  • Increased rebates and credits for individuals
  • Section 12B allows the deduction of renewable energy on a 50:30:20 basis. Applicable under certain circumstances, this is mostly for businesses.

Unfortunately, the tax savings on solar energy only came into effect from 1 March 2023, thus it will not be applicable to the 2023 tax year.
Let me provide some information on the tax savings in store for the 2024 tax year:


The South African Income Tax Act doesn’t normally allow a deduction of an expense used for personal consumption. National Treasury have proposed the following tax advances in the 2023 Budget:

An individual who installed solar at their private home can qualify for up to a R15,000.00 tax rebate. Rebate meaning a deduction against the tax calculated, not deducted from taxable income. This will reduce the tax due by up to R15,000.00. Naturally some T’s and C’s apply:

Source: National Treasury
  • Only new and unused solar PV panels qualify, to ensure that the capacity is in addition to what the country already has in place. The panels can be installed as part of a new system, or as an extension of an existing system.
  • Only solar PV panels with a minimum capacity of 275W per panel (design output) qualify for the rebate.
  • Other components of a system – batteries, inverters, fittings or diesel generators – and installation costs do not qualify. Portable panels will also not qualify.
  • Solar PV panels must be installed at a residence that is mainly used by an individual for domestic purposes. The installation will have to be proved with a certificate of compliance in terms of the Electrical Installation Regulations, 2009 to ensure safety of the installation and compliance to electric regulations.
  • The solar PV panels must form part of a system that is connected to the mains distribution of the private residence.
  • 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.
  • A VAT invoice and proof of payment must be available for a SARS inspection.
  • Only the party that pays for the solar will qualify.
  • There is no need to refund SARS if the house where the solar was installed, was sold.

A few examples:

  • Installation of solar at my private residence of R40.000.00 (cost of solar panels) on 30 June 2023. I pay for this and get the necessary certificate. I will qualify for 25% limited to R15,000.00. My rebate will be R10,000.00.
  • Mr B owns a property that he lets out. He installs solar panels on 30 September 2023 to the value of R50,000.00. He pays for this and get the necessary certificate. He will qualify for a R12,500.00 rebate.
  • Mrs M installs a full system to the value of R200,000.00 on 1 February 2024. The value of the solar panels was R65,000.00. She will qualify for a R15,000.00 rebate.
  • Mr S and Mrs U jointly own a house. They install solar panels to the value of R100,000.00. They jointly pay for the panels. The necessary certificate is in both names. Both will qualify for a rebate of R12,500.00. (R100 000/2 = R50 000 x 25% = R12 500)
  • Miss L inherits money and installs solar at her office to the value of R200,000.00. She will not qualify for the rebate in her own name as this is only for private households. The business might get some benefit – to be discussed lower down.

The rebate can be used when provisional tax is calculated and paid to SARS for the 2024 tax year. This will be in August 2023 and February 2024.
Non-provisional taxpayers will only get the benefit when they submit their 2024 tax return. The tax season normally opens in July. Thus, they have to wait for July 2024.

Corporate benefits:

Source: SARS
The enhanced renewable energy tax incentive will apply to the following currently eligible renewable energy sources under section 12B of the Act used to produce electricity, without regard to any electricity generation limits contained under the current incentive as set out in section 12B of the Act:

  • Wind power
  • Photovoltaic solar energy
  • Concentrated solar energy
  • Hydropower to produce electricity
  • Biomass compromising organic wastes, landfill gas or plant material
The enhanced renewable energy tax incentive will also apply to the following currently qualifying supporting structures under section 12B of the Act to which the above-mentioned assets are mounted on or are affixed to:

  • the foundation or supporting structure is designed for the above-mentioned asset and constructed in such a manner that it is or should be regarded as being integrated with that asset;
  • the useful life of the foundation or supporting structure is or will be limited to the useful life of the asset mounted thereon or affixed thereto;
  • the foundation or supporting structure was brought into use on or after 1 March 2023 and before 1 March 2025.
  • the foundation or the support structure shall be deemed to be part of that asset mounted thereon or affixed thereto.

This incentive is applicable to new and unused assets, meaning adding to the national grid. The incentive starts on 1 March 2023 and will be available for 2 years up to 28 February 2025.

With this incentive the organization can qualify for 125% of the cost incurred for the assets mentioned above.

Care must be taken not to double deduct, only the Section 12BA (the new incentive) deduction will be allowed.

Some small print: If the asset is sold/recouped on or before 1 March 2026, 25% of the amount recovered/recouped will be added in the taxpayers taxable income.

In summary we will have to spend money to benefit from this tax incentive, but the benefit of not planning your day around loadshedding will be so worth it!

Do you need help with tax compliance? Contact Dale Petersen on 021 819 7802 or at dpetersen@wauko.com. We’re here to help.


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