Question NW617 to the Minister of Finance
09 May 2023 - NW617
Kruger, Mr HC to ask the Minister of Finance
(1)Whether sole proprietors will be eligible to claim a 125% tax deduction when they install solar energy panels; if not, what is the position in this regard; if so, what are the relevant details; (2) whether sole proprietors will be classified as individuals who are only able to claim a rebate of 25% of the cost of solar energy panel installations; if not, what is the position in this regard; if so, what are the relevant details?
Reply:
1. Sole proprietors earn business income as the base for the personal income tax. To calculate the taxable business income they would be able to claim depreciation and other capital allowances just like any other business. Therefore, should their investment conform to the requirements of the allowance, they will be able to claim the 125% tax deduction.
2. The rebate of 25% will not be available on any expenses that already enjoyed the 125% deduction against business income. If that deduction was not claimed, then a sole proprietor will be able to claim the rebate.
The policy process for the 2023 tax legislative amendments is underway. The Frequently Asked Questions document that was published on the day that the Minister of Finance delivered the Budget Speech states (and available on the website www.treasury.gov.za) that :
“This incentive will be included in the annual tax amendments. A draft version of the legislation will be published for public comment no later than the publication date of the 2023 Draft Taxation Laws Amendment Bill. The Minister tables tax bills during the Medium Term Budget Policy Statement (MTBPS) in October each year. Parliament considers the amendments after which the President can assent to the amendments – usually by January of the year after the announcement. The aim of this note [the FAQ document] and the draft legislation to follow is to provide as much upfront clarity as possible so that individuals do not feel they need to wait for the tax bills later in the year before making a decision to invest and benefit from the incentive. The guidance provided is, nevertheless, subject to the outcome of the consultative process on the proposal and Parliament’s ultimate decisions on the legislation giving effect to the
proposal.”