Solar Panel Tax Incentive For Individuals Summary

Finance minister Enoch Godongwana has announced that National Treasury will be providing tax incentives and tax relief to South African businesses and households to encourage a rapid move to renewable energy.

This will include a massive rebate for businesses launching renewable energy projects and a smaller incentive for private households.

Through these two incentives, the Treasury said it would be offering R4 billion in relief provided for individuals that install solar panels and R5 billion to companies through an expansion of the renewable energy tax incentive.

For private households, individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15,000.

“This can be used to reduce their tax liability in the 2023/24 tax year. This incentive will be available for one year,” the minister said.

To qualify, the solar panels must be purchased and installed at a private residence, and a certificate of compliance for the installation must be issued from 1 March 2023 to 29 February 2024.

The rebate is only available for solar PV panels, and not inverters or batteries, to focus on the promotion of additional generation.

In a practical example, Treasury said an individual who purchases 10 solar panels at a cost of R40,000 could reduce their personal income tax liability for the 2023/24 tax year by R10,000.

A different person is able to buy 20 panels at a cost of R4,000 per panel (so total cost of R80 000). The calculation of 25% adds up to R20,000, but they can only claim R15 ,000.

Other caveats to the solar incentive include:

  • Only new and unused solar PV panels qualify to ensure that the capacity is in addition to what the country already has in place. The panels can be installed as part of a new system, or as an extension of an existing system.
  • Only solar PV panels with a minimum capacity of 275W per panel (design output) qualify for the rebate.
  • Other components of a system – batteries, inverters, fittings or diesel generators – and installation costs do not qualify. Portable panels will also not qualify.
  • Solar PV panels must be installed at a residence that is mainly used by an individual for domestic purposes. The installation will have to be proved with a certificate of compliance in terms of the Electrical Installation Regulations, 2009 to ensure safety of the installation and compliance to electric regulations.
  • The solar PV panels must form part of a system that is connected to the mains distribution of the private residence