The 2024 Budget presented by finance minister Enoch Godongwana has come and gone, and with it, the end of the line for the rooftop solar tax rebate for individuals in South Africa. This tax break, which was announced during the 2023 budget, offered up to R15,000 rebates for individuals looking to install new solar panels in the country. However, it was only available for one year, from 1 March 2023 to 29 February 2024, and has not been extended.
The Solar Tax Rebate In SA Explained
The solar tax rebate was a welcome incentive for individual taxpayers who pay personal income tax and install new and unused solar photovoltaic (PV) panels. It allowed them to claim 25% of the cost of the panels, up to a maximum of R15,000 per taxpayer. However, there were certain requirements that had to be met in order to be eligible for the rebate. The solar panels had to be new and unused, with a minimum capacity of 275 W per panel. They also had to be installed at a primary residence mainly used for domestic purposes, and be part of a system connected to the residence’s distribution board.
While the solar tax rebate was a step in the right direction, it came with a host of rules and limitations. It only applied to new solar panels acquired after March 2023, and explicitly excluded other components of a solar setup, such as inverters and batteries. As per Treasury’s initial announcement, the rebate for individuals was set to end on 29 February 2024. However, businesses still have access to a different tax incentive, which will run for an extra year, with the deadline set for February 2025.
The only mention of the solar tax rebate in the budget was the Treasury’s review of the tax break, which it said has “promoted the installation of solar panels that are now generating 5,200 MW of electricity for households and businesses”. With no extension on the former rebate, South Africans who were still looking to take advantage of the tax break have only one more week to do so.
All Show And No Substance?
According to Rein Henkemans, CEO of Alumo Energy, the loss of the solar tax break shouldn’t have too much of an impact on South Africa’s booming solar market. He argues that the rebate was not very effective to begin with. “At first, the thought of the much-touted 25% rebate sounded rather tempting, but further examination proved it to have more holes in it than Swiss cheese,” he said.
Henkemans explains that taxpayers would have had to spend upwards of R60,000 to get the full benefit of the incentive, which was the R15,000 rebate. In many cases, this was more than what most homeowners needed to spend to meet their needs. He also points out that solar panels are the most affordable part of a setup, so the rebate never really helped the average household looking for a comprehensive system that required batteries, inverters, and installation.
Furthermore, Henkemans has noticed a trend towards more affordable solar models like rental or rent-to-own, which never qualified for the incentive to begin with. “In other words, the people that would be the most motivated by this R15,000 enticement, would ironically be the least likely to be able to afford paying for the entire system upfront to gain the rebate’s full benefit,” he said.
Are Solar Energy Investments Still Worth It Without The Solar Tax Rebate?
Even without the solar tax rebate, Henkemans believes that the main driving force behind solar adoption – persistent load shedding, rising electricity prices, and the need to ensure productivity – still persists and will keep the market going. “The loss of this rebate won’t make any real difference to the solar industry. Those who were planning on installing a system and reaping its benefits will likely proceed as intended,” he said.
Solar energy installation is a worthwhile investment, even without the tax rebate. There are several factors to consider. First, they can lead to long-term savings by reducing your reliance on the grid and lowering your electricity bill. Additionally, solar energy is clean and renewable, making it a more environmentally friendly option. By installing solar panels, you can also gain more energy independence and have more control over your power supply. The cost of solar panels has decreased over the years, making them more accessible, and advancements in technology have improved their efficiency. Furthermore, solar panels can increase the value of your property, as many buyers appreciate solar’s energy-efficient features. It’s important to remember that the decision ultimately depends on your specific circumstances, such as location, budget, and long-term plans. Consult Alumo Energy, your local solar experts to assess the feasibility and benefits tailored to your situation.
Conclusion
The solar tax rebate in South Africa has come to an end, but the demand for solar energy remains strong. While the rebate may have had its limitations, it was a step towards promoting the use of renewable energy in the country. With the ongoing challenges of load shedding and rising electricity prices, it is clear that solar energy will continue to play a crucial role in meeting the energy needs of South Africans.