Solar Energy Tax Credit can be Deducted for Provisional Tax

Solar Energy Tax Credit can be Deducted for Provisional Tax

• 15 February 2024
• Tax
• South African Accounting Academy

Note: The modified Provisional Tax submission form, which includes the anticipated Solar Tax Credits for Feb 2024/P2, was initially scheduled by SARS to go live on Monday, 12 February 2024. Unfortunately, the final confirmation regarding the definite release by Monday, 12 February 2024 has not been received yet.

To encourage households to invest in clean electricity generation capacity as soon as possible, a tax credit has been introduced under section 6C of the Income Tax Act for a limited time.  Section 6C is deemed to have come into operation on 1 March 2023 and applies in respect of years of assessment commencing on or after this date. Furthermore, this section is only available for one year, that is, from 1 March 2023 to 29 February 2024.

This tax credit applies to any natural person who is liable for personal income tax and who invests in qualifying solar photovoltaic panels (solar PV panels).

Under this section, a natural person may be eligible for the tax credit on the cost that has been incurred in respect of the acquisition of qualifying solar PV panels. The cost relating to other components of a complete solar energy system such as inverters, batteries and supporting structures do not qualify for the tax credit.

Since the intention is to encourage natural persons to invest in renewable energy, the carrying on of a trade is not a requirement to be eligible to claim this tax credit.

For more information, refer to sections 10.1 and 10.5 of the updated Guide for Provisional Tax – External Guide

Click here to download the Guide:

https://www.sars.gov.za/wp-content/uploads/Ops/Guides/GEN-PT-01-G01-Guide-for-Provisional-Tax-External-Guide.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• The Income Tax Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with.  If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (Non-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.

• As an auditor, independent reviewer, accountant, or tax practitioner, you need to be aware of the changes to tax legislation that are brought about by the annual budget speech, as well as guides issued by SARS to provide clarity.

• As a tax practitioner and taxpayer, you also need to comply with Section 6C of the Income Tax Act, and how to correctly claim this tax credit for provisional tax purposes.

Relevance to Your Clients:

• Individual taxpayers must comply with Section 6C of the Income Tax Act, otherwise they could be held liable.

• It is important to be aware of the changes to tax legislation that is brought about by the annual budget speech, as well as guides issued by SARS to provide clarity.

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