New tax break for a very select few in South Africa

 ·13 Nov 2023

The Sustainable Finance Coalition, in partnership with The Department of Forestry, Fisheries and the Environment (DFFE), has executed the country’s first tax incentive for threatened species – such as rhinos and lions.

The programme aims to protect endangered animals and plants such as rhinos, lions, vultures, cycads, and many other vulnerable faunal and floral species.

“This unique tax incentive, section 37C(1) of South Africa’s Income Tax Act, is enabled by the signing of the country’s first-ever Biodiversity Management Agreements (BMAs) between the Minister of the Environment, Barbara Creecy, and South African taxpayers,” said the Coalition.

The tax incentive allows ordinary South Africans, who are safeguarding threatened ecosystems or species, to deduct all expenses related to their conservation efforts from taxable income.

It was also used to unlock South Africa’s Protected Area Tax Incentive, section 37D, garnering global recognition. Section 37D allows taxpayers to deduct the value of their land where that land is declared as a nature reserve or national park.

These initial BMAs, a Candidate Other Effective Area-Based Conservation Measure (OECM), are being implemented for the first time by landowners in the Limpopo Province, who are now able to access the deduction.

“Not only does this tax incentive provide a finance solution for conservation in South Africa, but it simultaneously creates a Candidate OECM. It has a dual impact on conservation and finance,” said Sustainable Finance Coalition CEO and Chairperson Candice Steven.

“Critically important to achieving our goals for nature is the need to increase finance available for conservation efforts. The tax incentive is expected to unlock finance for the conservation and maintenance of threatened species and ecosystems at approximately R1.5 million per annum.

“The incentive is niche, but it does provide a dedicated financial benefit for citizens seeking to do their part in protecting our country’s incredible natural heritage,” she added.

Rhino being dehorned to disincentivise poachers.

The tax incentive’s requirements are directly linked to the BMAs enacted by the National Environmental Management: Biodiversity Act No. 10 of 2004 (NEMBA), and conservation actions are guided by gazetted Biodiversity Management Plans (BMPs), said the Coalition.

“After the High-Level Panel Report in 2020, there was a strong sentiment that South Africa needed to do more to assist private citizens and communities owning and conserving rhinos for future generations. This tax incentive does exactly that,” said WFA CEO Andrew Muir.

If you are involved in the conservation and maintenance of threatened species and ecosystems (for example, rhino, lion, cycads, vultures, and others) for which a BMP has been published, you may be eligible to access the tax deduction.

You will need to sign a BMA with DFFE for a period of at least five years. Taxpayers who sign a BMA are contracted to conduct prescribed conservation and maintenance actions with respect to the threatened species they are managing. These actions may include:

  • Alien-clearing;
  • Fodder;
  • Ranger salaries;
  • Security;
  • Veterinary expenses; and
  • Member levies contributing to the conservation and maintenance activities of management associations of areas.

In return, these taxpayers, who do not conduct commercial operations on the land subject to the BMA, may be eligible to deduct expenses incurred in conducting the prescribed actions, which will consequently result in a reduction in tax payable.

The tax incentive will assist in closing the conservation finance gap and will benefit both people and places, the coalition said.

Read: SARS struggling to win over taxpayers

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