How to Claim the Solar Tax Rebate for Your Small Business in South Africa

Going solar is not just the ethical, environmentally beneficial choice; it can also reduce costs for small businesses in South Africa. 

To encourage renewable energy investments, the South African government offers a solar tax rebate. This rebate allows businesses to claim back a portion of their solar installation costs. 

For small business owners considering going solar, this rebate makes the financial benefits even more attractive. 

Here’s everything you need to know about claiming the solar tax rebate to maximise your savings.

What Is the Solar Tax Rebate for Businesses in South Africa?

Governments all around the world are finding ways to encourage businesses to adopt more eco-conscious practices. The solar tax rebate is one such initiative in South Africa designed to encourage businesses to switch to renewable energy.

Under the scheme, businesses can deduct a percentage of the costs of solar installation from their taxable income. This deduction ultimately reduces their tax burden. 

This is not to be confused with the incentive offered to individuals who install rooftop solar panels. They qualify for a 25% rebate on the cost of new or unused solar panels – up to a maximum rebate of R15,000.

The solar tax rebate for businesses is slightly different. Businesses can claim an upfront deduction of 125% for solar system investments. 

In simple terms, if you invest in a solar system, you can deduct 125% of that cost from your taxable income, which reduces the amount of tax you owe.

For example, if your business spends R100,000 on a solar system, you can deduct R125,000 from your taxable income. Essentially, this is a tax rebate for solar panels - the government is incentivising solar energy adoption by allowing you to write off more than what you actually paid.

Government Solar Rebates: Eligibility and Requirements

It’s important to know if you meet the criteria to claim the government solar rebates for your business. Here’s what you need to qualify:

• Who can apply? This incentive is available to registered companies, sole proprietors, and individuals conducting business activities. Just remember, this incentive is separate from the one available to individuals installing solar panels for personal use at home.
• You must own the solar system or other renewable energy assets you’re claiming the rebate for. If it’s not yours, you can’t claim the incentive.
• The solar system needs to be used to generate income for your business. It can’t just sit idle—you must actively use it for business purposes.
• Only new and unused solar systems qualify. Second-hand or previously installed systems don’t count for this rebate.
• To be eligible, your solar system must have been installed and used for the first time between 1 March 2023 and 1 March 2025.

How to Claim the Solar Tax Rebate for Your Business

Claiming the solar tax incentive for your business is a straightforward process if you follow these steps:

1. Gather necessary documentation:

• Invoice and proof of payment - Ensure you have an itemised invoice that shows the number of solar panels, cost per panel, and the total cost. You'll also need proof of payment for the solar installation.
• Electrical Certificate of Compliance (COC) - This certificate is essential and must include the registration number and contact details of the electrician who performed the installation. The certificate also confirms that the system is properly installed according to South African regulations.
• Proof of installation and usage date - You’ll need documentation confirming the date the solar system was installed and brought into use.

1. Submit your claim via SARS eFiling - Log in to your eFiling account and complete the relevant forms, including form ITR14.
2. Ensure compliance - Double-check that your installation complies with SARS regulations and the South African Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) guidelines​.

Submit the claim before the end of the tax year to avoid missing out on the rebate.

Tax Filing Tips for Solar Tax Rebate Claims

When preparing to file your solar tax rebate claim, it's important to be organised and have all the necessary documentation at hand. Here are some key tips to ensure a smooth filing process:

• Keep detailed records - Ensure you have invoices, certifications, and proof of payment for the solar installation.
• Maintain a compliance checklist - Double-check that your solar system meets the SARS and REIPPPP requirements.
• Consult a tax professional - A tax advisor familiar with renewable energy incentives can help ensure your claim goes smoothly. It’s good to speak to a tax professional to ensure you claim everything you’re entitled to as a business owner, anyway.
• Stay organised for tax season - Explore QuickBooks solutions to help manage your business finances and keep track of important tax-related documents throughout the year.

Other Business Tax Incentives for Solar Installations

In addition to the 125% tax incentive, there are other financial support schemes available to help businesses invest in solar energy:

• Energy Bounce-Back (EBB) Loan Guarantee Scheme -  This program helps businesses that may not have the immediate cash to hand for solar investments. It offers financing options to help small businesses and households to generate solar power and reduce the impact of load-shedding.
• Businesses that lease renewable energy assets, such as solar panels, can still benefit from tax incentives. In the case of finance leases, the lessor (the party that owns the asset during the lease) can claim the tax deduction. This makes it possible for businesses to access solar systems while enjoying the related tax benefits.

The overarching purpose here is that the government wants to facilitate switching even if upfront costs are an obstacle for businesses.

Benefits of Investing in Solar Energy for Small Businesses

Investing in solar energy makes sense financially, but it’s also a great way to participate in a drive toward more sustainable business practices. Let’s run through the benefits:

• By generating your own energy, you reduce your reliance on the grid, which means lower electricity costs. This is especially important given rising energy prices and ongoing load-shedding in South Africa.
• Solar energy allows you to take control of your power supply - energy independence. No more worrying about electricity shortages or price hikes—solar gives you the freedom to generate your own power.
• Benefit from incentives like the solar tax rebate, helping you lower your operational costs and see financial returns faster.
• You position your business as eco-friendly and forward-thinking.
• Solar systems have a long lifespan, often lasting 20-25 years or more. That means your investment continues to pay off.

Maximise Savings with the Solar Tax Rebate

By taking advantage of the solar tax rebate and other tax incentives, you can reduce your tax burden and boost energy efficiency for your small business. 

Investing in solar not only benefits the environment but also helps you save on energy costs in the long run. To maximise these savings, consider consulting with tax professionals for relevant advice.

For help managing your finances and staying on top of tax-related documents, explore QuickBooks—a comprehensive solution to simplify tax season.