Sars, Treasury want your opinion on these solar power tax breaks

The SA Revenue Service (Sars) and the National Treasury have called for public comment on draft legislative amendments to two renewable energy tax incentives.

The proposals, announced during this year's budget, aim to address the country's energy crisis and encourage people to invest in solar.

“This initial batch of the draft Taxation Laws Amendment Bill (TLAB) covers these two specific tax amendments and are urgent, due to the proposed early effective dates for implementation and to enhance certainty for individuals and businesses that would like to immediately invest in renewable energy. 

“The publication of the initial batch of the draft TLAB enables an early and additional public comment process that will enable the more detailed second-round process of public comment when these provisions are incorporated in the more comprehensive draft TLAB in July.”

Here's a look at the two proposed amendments:

Expansion of the renewable energy tax incentive 

Businesses will be able to claim a 125% tax deduction (in the first year) for qualifying renewable energy projects, with no threshold on generation capacity. 

This will be available for two years and will apply to renewable energy projects brought into use for the first time on or after March 1 2023 and before March 1 2025. 

Rooftop solar tax incentive 

Under the rooftop solar tax incentive, individuals will be able to receive a tax rebate to the value of 25% of the cost of any new and unused solar PV panels, up to a maximum of R15,000. 

The rooftop solar tax incentive will be available for one year and will apply to panels bought by the individual and brought into use for the first time on or after March 1 2023 and before March 1 2024.

“The draft legislation and the accompanying draft explanatory memorandum containing a comprehensive description of the proposed amendments can be found on the National Treasury and Sars websites,” the Treasury said.

“Public comments may include proposals by body corporates on how the rooftop solar incentive could be applied to members of the body corporate if a body corporate were to install solar PV panels for members’ benefit.”

Written comments can be forwarded to the National Treasury’s tax policy depository at 2022AnnexCProp@treasury.gov.za and Sars at acollins@sars.gov.za by May 15.

Knowing your size needs

According to solar expert Rein Snoeck Henkemans, MD of Alumo Energy, a typical residential solar panel is about 2m by 1m.

Henkemans said that size panel can generate about 405 watts of power.

“If you've got a bigger house with higher energy consumption needs, you will need multiple panels. To determine the right size system, a sizing calculator will help you estimate your needs,” he said.

He said calculation should consider the home's size, the number of occupants, and their energy consumption habits.

“Generally, the size of a solar system increases with the package size, which means that the larger the solar package, the more power you can generate and sweat up. This means that if you opt for a bigger package with more panels, you could potentially generate enough energy to power larger appliances or electronics in your home or business, which could lead to even greater savings on your electricity bill over time.

“It’s also important to remember that your solar system is not just a temporary or short-term fix to bridge your power gap — it should be seen as a long-term partnership that adds value to your home. And like any partnership, you can scale up and invest more in your system as you go along.”

How many solar panels do you need to keep switched on? 

Henkemans said the number of appliances you want on when load-shedding hits will determine the number of solar panels required.

“The calculation assumes you wish to power a CCTV camera and security system; a computer; one fridge or freezer; a kettle; 10 LED lights; a microwave; and a TV.  For this size system to be efficient, panels should range from eight 395kWh panels.

“The size of the solar power system increases as the package gets bigger, which means that you can generate more electricity and potentially save more money on your electricity bill. All packages come with a battery backup system option, which means that you won't have to worry about power outages affecting your home or business,” he said.