ACDC Express

Solar Panels, Tax Breaks, and You

Solar Panels Tax Rebates

The South African government finally announced a financial incentive for installing solar panels. While many proponents have suggested alternative measures, we at least have some incentive to make the jump to solar energy. As with most tax breaks, several restrictions need to be taken into consideration before buying a solar backup system. We recommend that anyone wanting to take advantage of this tax incentive looks at these restrictions and limitations carefully.

The tax break for individuals

Individuals who pay personal income tax can claim their solar panels against their tax liability. This specific rebate is not intended for solar installations at business premises, which falls under another incentive, discussed later.

The rebate is calculated at a value of 25% of the cost of new and unused solar photovoltaic (PV) panels. Individuals can claim a maximum of R15,000 in tax rebates. Only new and unused PV panels qualify, and they must have a minimum capacity of 275W per panel.

This rebate does not apply to the other components of a backup power system, such as batteries, inverters, installation, fitting, control modules, or a backup generator. Portable PV panels do not qualify.

The rebate only applies to qualifying solar panels first brought into use between 1 March 2023 and 29 February 2024.

To summarise, the tax break only applies to new, permanent solar panels with a minimum capacity of 275W. They must be installed and first used between 1 March 2023 and 29 February 2024.

A VAT invoice that indicates the cost of the solar panels as a separate line item is required, along with proof of payment, and a certificate of compliance showing that the PV panels were first used to generate electricity between 1 March 2023 and 29 February 2024.

PAYE taxpayers will be able to claim the rebate during the 2023/24 filing season. Provisional taxpayers will claim the rebate against provisional and final payments.

Things to consider

Solar Panels Tax Breaks

While R15,000 in tax incentive sounds tempting, it is worth noting that because this only covers the PV panels, this amounts to a considerable investment to take full advantage of this rebate. To qualify for the maximum allowed rebate, customers will need to purchase R60,000 worth of solar panels. Then more must be spent on fittings, installation, batteries, inverters, and more.

The price of solar panels is not the expensive part of installing a solar system, with the inverter and batteries making up the bulk of the price. That many solar panels could generate around 8kW, which means an 8kVA inverter is required. At the time of writing, an 8kVA hybrid inverter from Deye (DEYE-H-8K 48VDC) costs R45,579.00. To store enough energy for use during the evenings, batteries could easily match that price or more! Add on installation costs and fittings, and that R15,000 tax benefit will require a significant investment, which you will only have access to during the 2023/24 tax filing period. 

While this is a welcome incentive for anyone looking to install solar, only a small percentage of South Africans can afford this type of investment. Consider talking to your financial advisor, banker, or broker about financing options and whether your financial health will benefit or not. ACDC Express offers financing options for solar backup power solutions, inquire in-store for more information! While there is a possibility of selling surplus energy to the grid in the future, currently this is only possible in the Western Cape.

The tax break for businesses

Businesses will also be able to reduce their taxable income by investing in renewable energy, but with a different structure compared to the personal rebate. Businesses that invest in renewables will be able to deduct those costs at 125% of the cost of the investment, with no thresholds on generation capacity.

Previously, companies could reclaim the costs over three years, but with limited generation capacity.

This incentive only applies to investments brought into use for the first time between 1 March 2023 and 29 February 2024.

Going solar

Eskom’s ability to generate electricity is not going to improve overnight, which makes an investment into solar look pretty desirable. While the initial investment is a fair amount of money, these systems will quickly lower your monthly electricity bill, and it is possible that in the future you will be able to sell surplus electricity to the grid.

Having an inverter in your home or business also acts as a surge protector, as these devices are built to ensure that the energy provided won’t damage your electronics or appliances. There are other costs that a good backup power system will help you to avoid by having constant uninterrupted electricity, making it harder to track the money saved. For example, backup power will prevent food spoilage during power outages; theft or damage to your property due to a hole in your security system during load shedding, and more. They are also much quieter than running a noisy generator, with no fumes and low maintenance costs.

There is also the benefit of no longer watching your load-shedding schedule. Worrying about when to cook, clean or use certain appliances all adds up during the day, taxing an already overworked mind. A robust solar system will remove that added stress and mental arithmetic, leaving you more time (and mental faculties!) to work, study, relax or prepare for the next day.

Finally, there is the benefit of being green and friendly to the environment. Getting your energy from solar energy is much cleaner than coal-fired power plants, and as people switch to solar energy, it will reduce carbon emissions. With enough people providing excess energy to the grid, overall energy security will improve, which could eventually reduce the severity of load shedding that the country sees.

Before making any purchases, first consult your municipality, body corporate, estate, homeowners’ association, etc. to ensure that you are allowed to install PV panels 

See all of our products that are on sale, including solar panels, inverters, batteries, and more! 

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