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Can a taxpayer using solar panels for trade purposes get the s12B deduction?

Wednesday, 15 April 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: A corporate client purchased solar panels to generate their own electricity to use in their warehouses.

As per Section 12B(h) in the Income Tax Act you can have a 50:30:20 deduction if you generate electricity for the purpose of trade. I just want to confirm if there is any other requirements that they need to comply with to get the deduction?

A: The only requirements in section 12B(1)(h) are that the item (machinery, plant, implement, utensil or article) must be:

                    owned by the taxpayer or acquired by the taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the definition of ‘instalment credit agreement’ in section 1(1) of the Value-Added Tax Act;

                    brought into use for the first time by that taxpayer for the purpose of his or her trade

                    used by that taxpayer in the generation of electricity from solar energy. 

There are no other requirements as there are for section 12L for instance. 

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision. 



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