by Tech Talk | Feb 23, 2023 | Articles
Government has introduced a R9 billion tax relief programme to support South Africa’s clean energy transition, increase electricity supply and limit the impact of consistently high fuel prices.
The programme was on Wednesday unveiled by Finance Minister Enoch Godongwana while delivering the 2023 Budget Speech at the Cape Town City Hall.
In addition, the budget provides inflation-related adjustments to the personal income tax tables, the retirement tax tables, transfer duties and excise duties for alcohol and tobacco.
The 2023 Budget Review report indicates that while R4 billion in relief was provided for households that install solar panels, R5 billion was provided to companies through an expansion of the renewable energy incentive.
Above this, there would be no increase in fuel levies, resulting in R4 billion in tax foregone, reads the report.
Expansion of renewable energy tax incentive
Godongwana said the tax incentive available for businesses to promote renewable energy would be temporarily expanded to encourage rapid private investment to alleviate the energy crisis.
The current incentive allows businesses to deduct the costs of qualifying investments over a one- or three-year period, which creates a cash flow benefit in the early years of a project.
“There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in the short-term,” Godongwana said.
Treasury said businesses are able to deduct 50% of the costs in the first year, 30% in the second and 20% in the third for qualifying investments in wind, concentrated solar, hydropower below 30 megawatts (MW), biomass and photovoltaic (PV) projects above 1 MW.
“Investors in PV projects below 1 MW are able to deduct 100% of the cost in the first year.
“Under the expanded incentive, businesses will be able to claim a 125% deduction in the first year for all renewable energy projects with no thresholds on generation capacity,” said Treasury.
The Minister said the adjusted incentive will only be available for investments brought into use for the first time between 1 March 2023 and 28 February 2025.
For a business with positive taxable income, the deduction will reduce its tax liability. For example, a renewable energy investment of R1 million would qualify for a deduction of R1.25 million.
Using the current corporate tax rate, this deduction could reduce the corporate income tax liability of a company by R337 500 in the first year of operation.
Rooftop solar tax incentive
To increase electricity generation, government is also proposing a rooftop solar incentive for individuals to invest in solar PV.
The Minister said individuals will be able to receive a tax rebate to the value of 25% of the cost of any new and unused solar PV panels.
“To qualify, the solar panels must be purchased and installed at a private residence, and a certificate of compliance for the installation must be issued from 1 March 2023 to 29 February 2024.”
Godongwana said the rebate is only available for solar PV panels, and not inverters or batteries.
“It [the rebate] can be used to offset the individual’s personal income tax liability for the 2023/24 tax year up to a maximum of R15 000 per individual.”
For example, an individual who purchases 10 solar panels at a cost of R40 000 can reduce their personal income tax liability for the 2023/24 tax year by R10 000.
Godongwana said changes to the Bounce Back Loan Guarantee Scheme are also proposed to incentivise renewable energy, rooftop solar, and address energy-related constraints experienced by small and medium enterprises.
“Government will guarantee solar-related loans for small and medium enterprises on a 20% first-loss basis. National Treasury will launch the Energy Bounce Back Scheme in April 2023,” he said.
Editor@tech-talk.co.za
by Tech Talk | Feb 23, 2023 | Articles
Government is expected to spend at least R1.4 trillion over the next three years on higher and basic education and the sports, arts and culture function.
This is according to National Treasury documents presented alongside Finance Minister Enoch Godongwana’s 2023 Budget Speech, this afternoon in Cape Town.
According to the Treasury documents, the Department of Basic Education’s (DBE) spending is expected to rise from R39.4 billion in the coming financial year 2023/24, to R316.5 billion in 2024/25 and reach some R331.2 billion in 2025/26.
“The basic education sector receives 66.9% of [the learning and culture] funding over the MTEF [Medium Term Expenditure Framework] period, of which compensation of employees accounts for just over half.
“Additional funding of R20 billion is allocated through the provincial equitable share, mainly to cover shortfalls in basic education compensation budgets. Funding for the national school nutrition programme grant is increased by R1.5 billion over the MTEF period to ensure that the meals provided to learners meet nutritional requirements,” National Treasury said.
The Early Childhood Development (ECD) function – which was transferred to the DBE from the Department of Social Development (DSD) – will be given a financial boost to serve more children.
“The [ECD] grant receives an additional R1.6 billion over the medium term to increase the number of children receiving the early childhood development subsidy, provide pre-registration support to early childhood development centres, and pilot a nutrition support programme and a results-based delivery model where the service provider is only paid for the outputs delivered.
“Additional funding of R198 million is allocated in 2023/24 to enable provision of early childhood development resource packages, which include daily activity plans linked to the National Curriculum Framework.
“Over the MTEF period, R30 million is allocated to improve the [DBE’s] oversight and capacity for managing the programme,” Treasury said.
Some R283.3 million has also been allocated to the DBE to repair those schools damaged during the devastating April 2022 floods both in KwaZulu-Natal and the Eastern Cape.
Furthermore, R1.5 billion is allocated over the next three years for Gauteng’s school infrastructure improvement project.
Higher Education
Over the MTEF, the Department of Higher Education’s (DHET) expenditure is expected to reach some R135.6 billion in 2023/24, R148.3 billion in 2024/25 and rise to R153.9 billion in 2025/26.
In 2023/24, at least R50 billion will be allocated to the National Student Financial Aid Scheme (NSFAS).
DHET’s second biggest spending point in 2023/24 is expected to be universities’ subsidies coming in at some R44.4 billion while spending at Technical and Vocational Education and Training (TVET) colleges and Community Education and Training (CET) centres combined will reach at least R15 billion.
“The [DHET] has reprioritised R1.1 billion over the medium term to enable the community education and training (CET) sector to build its own infrastructure for learning and teaching, reducing its current reliance on basic education school infrastructure.
“Expenditure for the post-school education and training sector increases at an average annual rate of 5 per cent over the medium term, supporting universities, technical and vocational education and training (TVET) colleges, CET colleges and sector education and training authorities in delivering quality post-school education and training,” the department said.
The National Treasury said Sports, Arts and Culture will receive some R35.7 billion over the MTEF to “support sports in schools and preserve, develop and promote cultural, heritage and linguistic diversity, and build social cohesion”.
Editor@tech-talk.co.za
by Tech Talk | Nov 7, 2022 | Articles
National Treasury and the National Revenue Fund will enter into an agreement with the Gauteng provincial government on the province’s commitment to settle its portion of the South African National Roads Agency (SANRAL) debt.
The agreement is set to include implementation modalities for the settlement of the Gauteng Freeway Improvement Project (GFIP).
This comes after Finance Minister, Enoch Godongwana, in the 2022 Medium-Term Budget Policy Statement (2022 MTBPS) last week announced the roadmap on the SANRAL debt in Phase 1 of the GFIP.
Clarifying its stance, National Treasury in a statement on Friday reiterated that government would take over the existing debt and associated obligations of SANRAL.
These obligations will be shared between the national and provincial government.
SANRAL’s total debt, as of 31 March 2022, was R45.936 billion. GFIP Phase 1 was funded as part of the Toll Portfolio and not as a ring-fenced project. The value of debt attributed to GFIP Phase 1 is R43.031 billion.
In the statement, Treasury said the Gauteng government will pay 30% of the debt and interest obligations of GFIP Phase 1, or R14.1 billion, as well as the maintenance costs related to the project’s Phase 1 network. The national government will cover 70% of the debt and interest obligations, or R32.9 billion.
“The amount announced by the [Finance] Minister represents the majority of the national government obligation and will ensure that SANRAL remains a going concern in the medium-term.
“National government will make arrangements for the rest of the funds related to its share of the debt obligation at the appropriate time, in line with the conditions and obligations related to the process, and in a manner that does not negatively affect the overall fiscal trajectory, as outlined in the 2022 MTBPS.”
The agreement, said Treasury, is also expected to set out how the province will pay for these commitments.
One of the conditions of the R23.7 billion proposed in the Special Appropriation Bill is that these modalities must be concluded by 31 December 2022.
It said decisions expected by the province will also include the treatment of legacy matters, such as revenue collected from users who have been paying their toll fees and/or those who have not paid.
The provincial government reads the statement, and must finalise a long-term revenue solution that makes funding available for the maintenance of the road network, with SANRAL continuing to execute the maintenance thereof.
“The option to utilise the existing toll mechanism remains open and would result in the toll network proclamation remaining in place. If the province’s provision for maintenance of the network is financed through other revenue streams within its area of responsibility, the processes on undeclaring the toll network, in terms of section 27 (1) of the South African National Roads Agency Limited and National Roads Act (Act 7 of 1998) will need to be undertaken.
“This notwithstanding, all necessary statutory and regulatory processes that must take place to give effect to the Minister of Finance’s announcement are underway including consultation with relevant stakeholders. Until a notice in the Government Gazette is issued, SANRAL has a statutory obligation to collect any toll fees due to them.”
Treasury said the functional assignment of roads, in terms of the Road Infrastructure Strategic Framework for South Africa, remains in place. As a result, the 201 kilometres of the national roads on the GFIP network will remain as national roads and can only be reassigned to other spheres of government by notice in a Government Gazette, with the concurrence of SANRAL debt holders.
“National government affirms that direct road user charges are the most effective, equitable and efficient way to finance road infrastructure. It is also a mechanism to manage transport demand, impacting on modal choice and spatial inequality,” Treasury said.
Editor@tech-talk.co.za
