SARS announces big changes for tax season 2024 – including solar and tax-free savings

The South African Revenue Service (SARS) has detailed the big changes for tax season 2024, which kicks off on 1 July with the rollout of auto-assessments.

The revenue service highlighted six main changes for individual taxpayers, with updates to processes, forms and tax types.

The changes are mainly technicalities—such as dealing with the timing of deductions from contributions to retirement funds and tax-free savings accounts—or introducing entirely new subsidies.

Most notably, the 2024 tax year is the one in which the solar tax credit is in effect, and anyone who took advantage of the temporary subsidy should remember to declare it as such this year.

Other changes relate to SARS’ new focus on beneficial owners and attaching the tax affairs to the individual taxpayers involved rather than the tax practitioners they hire to do the admin.

Key filing dates

The changes are outlined below:

Pro-rata deduction in respect of contributions to Retirement Funds

Section 11F(2)(a) of the Income Tax Act No 58 of 1962 was amended as follows:

Where any person’s year of assessment is less than 12 months, the amount stipulated in section 11F(2)(a) of the Act used to calculate the allowable retirement contribution deduction (currently R350,000) shall be adjusted. The adjusted amount will bear the same ratio to R350 as the number of days in that year of assessment bears to 365 days.

Therefore, if any person’s year of assessment is less than 12 months, the allowable retirement contribution deduction (currently R350,000) will be applied pro rata.

Exemption of amounts received or accrued in respect of tax-free investments

Section 12T(4)(a) of the Income Tax Act was amended as follows:

Where any person’s year of assessment is less than 12 months, the contribution limitation stipulated in section 12T(4)(a) of the Act (currently R36,000), shall be adjusted. The adjusted contribution limitation will apply in aggregate for any year or years of assessment during the 12-month period commencing in March and ending at the end of February of the immediately following calendar year.

Therefore, if any person’s year of assessment is less than 12 months, the applicable contribution limitation (currently R36,000) will be applied pro rata.

Deductions in respect of the erection or improvement of buildings in Urban Development Zones Section 13 of the Income Tax Act, was amended by substituting the following paragraph in subsection (5) for paragraph (c): ‘‘(c) which is brought into use by the taxpayer after 31 March 2025.’’

Therefore, the Income Tax Return (ITR12) form will be amended to extend the allowable deduction until 31 March 2025.

Solar Energy Tax credit

To encourage individuals to invest in clean electricity-generation capacity, the solar energy tax credit was available for one year.

It applied to new and unused solar PV panels that were acquired by the individual and brought into use for the first time from 1 March 2023 to 29 February 2024.

The solar energy tax credit allowed as a deduction to an individual was 25% of the cost of the solar PV panels described above, up to a maximum of R15,000.

It should be noted that a deceased estate did not qualify for solar tax credit.

Redesigned deduction in respect of certain machinery, plant, implements, utensils and articles used in the production of renewable energy

The redesigned Renewable energy tax incentive will apply to the currently eligible renewable energy sources, with no electricity-generation limits for the duration of this temporary incentive.

Assets will qualify if they are used in the generation of electricity. Businesses can deduct 125% of the cost incurred with reference to eligible assets, upfront.

Where a taxpayer disposes of an asset on or before 1 March 2026, for which a redesigned renewable energy tax incentive is granted, the amounts deducted (a maximum of 125% of the cost of the asset) will be fully recouped.

ITR12 Form changes

• Redesign sections 10(1)(o)(i) and 10(1)(o)(ii): Foreign Employment Income Exemption:

SARS has redesigned the s10(1)(o) (i) and s10(1)(o)(ii) questionnaire to make it easier for taxpayers to complete the return.

It noted that the ITR12 form rules were a challenge to taxpayers.

Previously, taxpayers had to first select the applicable wizard questions for the income, exemption, and foreign tax credit containers before completing the exemption amount for qualifying criteria.

The updated form streamlines this process, making it easier for taxpayers to complete the return.

• Beneficial owner:

In recent years, SARS has observed that Tax Practitioners sometimes put their own details in the contact information section in the place designated for the individual taxpayers that they represent when submitting ITR12 forms.

SARS has now emphasised to practitioners that when completing and submitting ITR12 returns for individual taxpayers, they must ensure that the container designated for the individual taxpayer’s details is filled with the taxpayer’s information, not that of the Tax Practitioner.

“Importantly, it must be noted that there is already a designated container for Tax Practitioners to declare their own particulars. Therefore, Tax Practitioners must not use fields intended for individuals to declare their own details.

“In addition, remember that the information in the declaration must be true and accurate,” SARS said.

Read: SARS warns taxpayers to check their bank details