How solar can help your business
- Lots of Roof Space?
- Generating heat resulting in more Air Conditioning use?
- Is Rising Overheads a problem?
- Is most Electricity used during the day?
- Then Grid-Tie is the perfect solution.
- Saving Money is just as good as Making Money.
- VAT can be claimed as Capital Goods.
- Tax Benifit
All Solar Products are subject to the Accelerated Depreciation provided for under Section 12B of the Income Tax Act.
This means that 50% of the system cost can be written off under Depreciation in the first year.
30% of the system cost can be written in the second year, and 20% in the third year.
Income Tax = 28%, VAT = 14% = 42% of the System Cost you will be paid back!
This makes the Return on Investment ridiculous! 4 Time Payback within Warranty Period – what’s the risk?
- Risk 1: The Sun will stop shining.
- Risk 2: Eskom’s tariffs will decrease.
Energy bills are a significant component of a company’s operating costs. With energy prices on the rise and the already 12% increase for 2015, an ever looming proposed 12% for 2016 South African businesses will need to fork out. Why keep paying when you could divert that expense toward paying a solar system and have your own green power plant on site? SolarSkye’s energy solution is fully-customised, high quality, long-lasting and backed by our comprehensive after-care support. We have partnered with some of the world’s most technically advanced Solar Manufacturers to make this possible.
From 2016, businesses have a new incentive mechanism to take advantage of Solar PV and receive a tax benefit while saving on electricity costs. Specifically, this amendment allows for 100% of the cost of the system to be depreciated in the first year, providing an effective 28% saving on the purchase cost. This article will explain the new 12B provision and how it can be used by businesses considering commercial solar installations.
How Does Accelerated Depreciation Help?
28% of a PV system’s cost can be saved in year 1 through a reduced tax bill. This is achieved by recognizing 100% of the system’s price as a taxable cost in year 1, and therefore reducing the net tax payable by 28% (the corporate tax rate) of this amount. This in turn improves the return on investment of a system by as much as 38% and reduces the payback period significantly.
The Details – What Does Section 12B Actually Say?
Section 12B of the Income Tax Act of 2016 provides a remarkable benefit for commercial solar photovoltaic systems under 1 megawatt (MW). For these systems, provision 12B provides for an accelerated depreciation allowance on the entire cost of the solar system – most simply defined as the cost of the system to the taxpayer, plus the cost of its installation – within the first year. The provision can also be applied to foundations or supporting structures that are deemed to be part of the solar PV asset.
Interestingly, the full allowance can be claimed even if the solar PV system is installed mid-year or only used for a portion of the year. However, it is not possible to claim this asset in multiple years; it is only applicable when the solar PV system is “brought into use for the first time by the taxpayer.”
This benefit also applies to systems purchased through finance agreements so long as the business is the first “owner” of the system.
To read the full text, click here. (Scroll to page 40 to view relevant provision.)
Why Does SARS Provide Such a Generous Deduction?
Section 12B is meant to stimulate business investment into clean, renewable energy. It is very similar to many other tax provisions around the world, including the business Investment Tax Credit in the United States.
Calculate the ROI of your SolarSkye system
Solar energy is a booming industry across the globe. Thanks to the radical drop in prices and ever increasing technology, it has become more cost effective to buy a solar system than to buy electricity from ESKOM. Solar provides predictably priced renewable electricity for 25-30 years. Making it easy for your business to forecast operational expenses.
The following steps are intended to help you see why solar is the way forward for your company. Each company will vary so CONTACT SOLARSKYE TO GET A FREE QUOTE and an assigned technician to help you do the calculations.
When taking the steps of solar freedom there are 2 important calculations to consider:
1. Annual return (The ROI is how much return on your investment you’ll get each year)
2. Payback period (The payback period is the timeline for when your solar system have paid for itself)
Step 1: Calculate the average electricity bill amount over the last 12 months.
Step 2: Determine the total installed cost of a solar system. This includes expenses such as PV panels, installation costs, permits, etc. Look on a recent electricity bill from Eskom or your local municipality to determine how much you pay per kilowatt hour (kWh). SolarSkye’s dynamic team can help you through the entire discovery process.
Step 3: One of SolarSkye’s technical experts will help you determine how much electricity your solar panels will generate to meet your demand.
Step 4: Calculate your solar system’s payback period and return on investment (ROI). (Solar Payback Period = Initial Net Investment / Yearly Rebate only available in PE and Cape Town). For example, if your installed solar system costs were R100 000 ect VAT and your yearly increase is 12-19%, your payback period would be 6 – 8 years. A typical 5 kW solar PV system can easily see an ROI of 20% in the first year. (Remember to keep in mind the yearly electricity tariff increase)
What we do for you
SolarSkye will perform an obligation-free, comprehensive energy audit. Solarskye will also do a site consultation to customise a turnkey solution to meet your business’ needs. We combine years of experience with innovative products and services to deliver solar projects that reduce energy costs. SolarSkyes’ products are measurably beneficial and will positively impact your company’s bottom line. With our transparent approach, SolarSkye can provide a financial analysis in a comprehensive proposal that details your energy-saving options with measurable outcomes.
To ensure that we give you the best service when it comes to your business, please contact us. We know that each and every business functions and operates on different electricity demands.
How we will help you
1. One of our sales consultants will contact you to gather more information regarding your business’ electricity demands.
2. We will send a technician to your property to do a site inspection to assess the best package to cater for your business demands.
3. A system design and quote will be formulated and discussed with you. All the technical details will be discussed and explained by our team of experts. To give you peace of mind in regards to quality and product warranty.
4. When you are satisfied, and understand all the technical detail, you can partner with us in a long-term solar investment.
5. Installation process. Residential installations take between 1-3 days whereas the timeline of Commercial installations are determined by the size of the project.
6. After installation a final inspection and commissioning of the system will take place.
7. SolarSkye will issue a Certificate of Compliance.
What we stand for
SolarSkye stands for quality products, professional installations, local people, honest advice and fully qualified, engineer-accredited designs. Our reputation is built upon trust, industry-leading warranties and excellence in project delivery. We believe in providing high quality, yet affordable solutions that yield high comparative returns on investment and that represent the peak of photovoltaic design and operational excellence.