SARS Clears the Air on Solar Credits, No Tax for Net-Billing Users

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If you or your clients have solar panels and send extra power back to the grid, there is good news. SARS has released a new Guide on the Tax Treatment of the Netbilling Tariff System for Excess Power Generated explaining how tax works when you earn credits for that power under a system called net-billing.

What Is Net-Billing?

Net-billing is when your unused electricity gets sent to the grid and you get credit on your electricity bill. These credits help lower your future bills but you do not get actual cash.

How Will Tax Work?

SARS has now confirmed that these credits are not seen as income, which means they are not taxable. This applies whether you are a homeowner or a business. As long as no money is received, there is no income tax.

For businesses, there may still be tax benefits. If the power system is used in your income-producing activities, you can deduct some costs like admin and maintenance. You may also be able to claim a capital allowance for the cost of installing the renewable energy system.

For VAT, the story is also simple. If you are not already VAT-registered, sending power to the grid will not require you to register. There is no VAT charged or collected on the credits. If you are a VAT-registered business and the system is part of your operations, you might be able to claim input VAT on related costs. But this only applies if the system supports your business directly.

Who does this affect?

Anyone using renewable energy, especially solar, with a grid connection and a net-billing agreement. That includes households, small businesses, and even some larger companies.

What should taxpayers expect? No income tax on the credits, no VAT issues unless they are already in business, and possible deductions or capital claims if they are trading.

The bottom line is this, going green does not mean getting tangled in tax. SARS is keeping it straightforward for those using net-billing.

Thinking of switching to solar? Make sure you understand the tax side. Helping clients navigate this is a great value-add. Clean energy is smart, and SARS is making it simpler to manage.