South Africa: Proposed amendments to renewable energy allowances
A temporary enhanced allowance for new and unused renewable energy assets
A temporary enhanced allowance for new and unused renewable energy assets
The Taxation Laws Amendment Bill that was issued on 1 November 2023 would provide for a temporary enhanced allowance for new and unused renewable energy assets currently included in section 12B of the Income Tax Act, brought into use on/after 1 March 2023 and before 28 February 2025.
- A deduction under section 12B would be disallowed if the taxpayer qualifies for section 12BA such that taxpayers may claim a 125% deduction under section 12BA rather than a 100% deduction under section 12B.
- The definition of “capital expenditure” in section 36 would be amended to include the expenditure referred to in section 12B and proposed section 12BA. The inclusion of qualifying section 12BA expenditure in section 36 would be effective from 1 March 2023 and apply to assets brought to use on/after that date and before 1 March 2025, while the inclusion of qualifying section 12B expenditure would be effective from 1 March 2025 and apply to assets brought into use after 28 February 2025. This amendment would clarify the application of the renewable energy tax incentive to qualifying mining capital expenditure.
- Reference to lease arrangements would be removed from section 12BA such that lessors in a finance lease or operating lease arrangement would be eligible to claim an allowance under section 12BA.
Read a November 2023 report [PDF 396 KB] prepared by the KPMG member firm in South Africa
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