SARS Incentives to powering your work-from-home Small Business

Income Tax

While Eskom’s troubles manifest through never-ending loadshedding, it is a setback for most SME’s, especially those that do not have alternate power solutions.  For some small business owners, however, there’s a silver lining and it comes in the form of income tax incentives in the renewable energy space. 

S12B Incentive

While most SME’s rely on the 50:30:20 accelerated write-off Small Business Corporation (SBC) tax rules within the Income Tax Act (“the Act”), S12B offers an incentive still more attractive than this.  It relates to investment in renewable energy, which could be powering your new small business. 

S12B has been amended to allow for an immediate write-off (without apportionment) of 100% of the cost of your grid-tied solar installation, provided it does not exceed 1 megawatt.  For any budding small business owner, this is an incentive that could set you apart from other small business owners, in your ability to service the needs of your customers, notwithstanding our new normal of daily loadshedding.

What can be claimed back?

Here’s what you can claim back under the incentive:

01

Project design and engineering

02

Project installation planning costs

03

Photovoltaic (PV) panels and inverter system

04

Delivery and installation of the system fundamentals

The incentive does not apply to systems that are battery powered via inverters, however.

The BUT

You need to know the caveats, they are:

  • The solar equipment must be owned by the taxpayer, or the taxpayer must be paying a credit instalment where the installation is financed.
  • If you are already using renewable energy, you cannot rely on S12B as it applies to the first-time purchase. It does, however, apply if the equipment purchased by you is second hand.
  • It applies only to wind power, PV solar, concentrated solar, biomass and hydropower producing less than 30 megawatts.
  • The 100% deduction applies only to PV solar energy producing less than one megawatt.
The Silver Lining
  • VAT may be claimed on the installation.
  • Your business from home is always powered, saving you money while it makes money for you.
For those small business owners that have the means to make this investment to power your enterprise, it’s a win-win thanks to the attractive income tax incentives available from SARS.  Reach out to our team for a consultation to discuss how this investment can introduce a quantifiable upside for your small business.