Tax Practitioner Connect Issue 49 (February 2024)

Solar Energy Tax Credit

SARS has introduced the Solar Energy Tax Credit under Section 6C of the Income Tax Act. This tax credit encourages households to invest in clean electricity generation capacity.

Section 6C is deemed to have come into operation on 1 March 2023 and applies in respect of years of assessment commencing on or after this date. Furthermore, this section is only available for a limited period of one year, that is, from 1 March 2023 to 29 February 2024.

This tax credit applies to any natural person who is liable to pay Personal Income Tax and who invests in qualifying solar photovoltaic panels (solar PV panels).

Under Section 6C, a natural person can claim the tax credit on the actual cost of buying qualifying solar PV panels. You cannot claim the Solar Energy Tax Credit for costs relating to other components of a complete solar-energy system such as inverters, batteries, and supporting structures.

Only solar PV panels brought into use for the first time from 01 March 2023 to 29 February 2024 with a minimum generation capacity of more than 275 watts each will qualify. The taxpayer claiming the tax credit must have an electrical certificate of compliance issued in terms of Electrical Installation Regulations, 2009. You can claim this tax credit even if your solar panels power your house rather than a business.

The Provisional Tax Return (IRP6) has been updated with a “Solar Energy Tax Credit” field to enable provisional taxpayers to take the tax credit into account in determining provisional tax payable for the second provisional period of the 2024 year of assessment.

For more information on the Solar Energy Tax Credit: Legal-Pub-FAQs-IT04 – 2023 Budget FAQs – Solar Panel Tax Incentive for Individuals.

Also see the updated guide for Provisional Tax: GEN-PT-01-G01 – Guide for Provisional Tax – External Guide.

The SARS draft guide can be accessed on: Legal-LPrep-Drafts-2024-02 – Draft Guide – Solar energy tax credit provided under section 6C.

SARS is evaluating comments from the public and will publish the final guide once the process is completed.

Recognition of Controlling Bodies and Registration of Tax Practitioners

To fully implement Chapter 18 of the Tax Administration Act and ensure the professionalism of the tax advisory industry, SARS has updated the criteria to recognise controlling bodies and register tax practitioners.

The amended criteria cover:

  • Requirements of individuals when registering as a Tax Practitioner.
  • Requirements of Tax Practitioner Membership relating to practitioners’ Recognised Controlling Bodies (RCBs).
  • Requirements of Controlling Bodies to be approved as RCBs.

For more information, please see the updated guide:

GEN-GEN-21-G01 – Criteria for the Registration of Tax Practitioners and the Recognition of Controlling Bodies – External Guide

VAT Enhancements for Estimated Assessments

SARS has implemented the estimated-assessment functionality for VAT. If a vendor does not provide the relevant material requested by SARS during the VAT verification process, SARS may raise an estimated assessment in terms of section 95(1)(c) of the Tax Administration Act.

  • The details of the estimated assessment appear on the notice (VAT217) issued to the vendor.
  • A Request for Correction will not be allowed if SARS has raised an estimated assessment for VAT in the same period.
  • Vendors who do not agree with the estimated assessment must submit the material requested by SARS within 40 business days from the date of the VAT217 notice issued.
  • The vendor can submit the outstanding relevant material on eFiling, at a SARS branch, or through the SARS Online Query System (SOQS).
  • Vendors can submit a Request for Extension if they cannot submit the material within 40 business days.
  • If SARS approves the Request for Extension, the vendor will have up to the date of extension, or five years plus 40 business days to submit the relevant material.
  • The vendor can submit a Request for Suspension of Payment if the estimated assessment results in an amount payable for the period stipulated in the VAT217 notice issued.
  • The vendor cannot submit a Notice of Objection because an estimated assessment issued in terms of Section 95(1)(c) cannot be disputed.

For more information, see the following updated external guides:

Local Assets at Market Value Declared on the ITR12 Return

From the 2023 year of assessment, taxpayers must complete the section for “Local Assets (at Market Value)” on the Individual Income Tax Return (ITR12) if the value of their local assets is worth more than R50 million. Many taxpayers have contacted SARS to ask if the asset value declared on the ITR12 return should be supported by a professional valuation.

It is not compulsory to obtain professional valuations to complete the market value of the local assets. SARS will accept a market value that is a reasonable best estimate. In other words, the estimate should be as close as possible to the market value of the particular asset. For more information, please refer to the comprehensive guide below.

The updated external guides are:

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