The 2023 Budget speech provided hope to those seeking to install Solar devices and join in on green initiatives. This was through the announcement of imposing a Solar Tax Credit for individuals within the 2024 tax season, 01 March 2023 to 29 February 2024. As the opening of the filling season comes near, here is what taxpayers need to know.
Nicolas-Botha
Tax Team Compliance & Processing Manager
To qualify for the tax credit, specific criteria and conditions must be met. Firstly, only new and unused solar panels are eligible for the tax credit. Second-hand or refurbished panels do not qualify. These panels must be acquired and brought into use for the first time during the 2024 year of assessment. Each solar panel must have a minimum generation capacity of 275 watts. The solar panels must be part of a system connected to the distribution board of a residence, and this residence should be used more than 50% for domestic purposes. Lastly, an electrical certificate of compliance must be issued for the residential property after the installation of the solar panels.
Unfortunately, it seems many of the costly expenses involved in solar system installations will not qualify. With SARS specifically noting that expenses incurred from batteries, inverters, fittings or diesel generators, installation costs and portable panels will not qualify.
When filing your tax return, you’ll need to provide specific information regarding your solar panel installation. You will need to declare the number of new and unused solar panels installed. Additionally, you need to confirm that each solar panel has a minimum generation capacity of more than 275 watts. You must also confirm that the panels are connected to the distribution board of a residence used mainly for domestic purposes. You also need to confirm that an electrical certificate of compliance has been issued for the installation. Lastly, enter the total cost incurred for the solar PV panels.
The burden of proof will remain with the taxpayer. All declarations made on your returns are legal statements with SARS having the right to query these through a verification process or audit. Thus, it is important to keep your ducks in a row for all declarations made in respect of claiming the credit. You will need a VAT invoice that clearly indicates the cost of the solar panels separately from other non-qualifying items. It is also essential to maintain clear proof of payment for the solar panels. Additionally, it is important to ensure you have an electrical certificate of compliance handy when submitting.
By adhering to SARS guidelines and maintaining supporting documentation, you can effectively leverage the solar tax credit to reduce your tax burden. As the filing season approaches, it is essential to stay informed and ensure that all criteria are met to claim the credit successfully. If you encounter any difficulties or have complex matters to address, consulting with a tax professional is highly recommended. A tax expert can provide personalized advice and help navigate any challenges, ensuring that you maximize your tax savings and comply with all regulations.
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