The South African Revenue Service (Sars) has proposed adding installers of solar photovoltaic (PV) panels – along with trustees and charities – to the list of third parties that are required to submit taxpayer information to Sars.
Sars wants to ensure that taxpayers who claim the tax rebate for installing solar PV panels at their place of residence do, in fact, qualify for the incentive.
Read: A deeper look at the solar panel tax incentive for individuals
The notice sets out the (juristic) persons that must submit third-party returns to Sars, detailing taxpayer information and transactions. These entities include banks, life insurers, and medical schemes. Sars issues the notice annually.
The draft notice was issued under the Tax Administration Act, which empowers Sars to gather third-party information and impose penalties on those who do not comply.
The draft notice proposes the submission of three additional types of information:
- Charities must submit an IT3(d) form that discloses information relating to the donations they received. Read: Requirements for claiming a tax deduction for charity donations amended
- Trustees must submit details, on form IT3(t), of distributions made from a trust to beneficiaries. Read: Trusts are facing a multitude of new reporting requirements
- A person who issued a solar installation certificate of compliance must disclose information relating to the installation of new and unused solar PV panels at a residence solely or mainly used for domestic purposes.
The draft notice says the return that will be used to submit the information will be determined after consultation with industry bodies and other stakeholders.
The return will include the following details:
- The income tax reference number (or identity number if no income tax reference number is available) of the person on whose behalf the installation was done;
- The physical address of the installation;
- The cost of the solar PV panels; and
- The date on which the panels were first brought into use.
The proposed deadline for submitting the returns is 31 May 2024. The requirement applies to PV panels that were first brought into use from 1 March 2023 to 29 February 2024.
The backdating of the notice to 1 March means that solar installers that have fitted panels to homes since 1 March may have to contact the clients to obtain the required information if they did not collect it at the time.
Section 234(2)(d) of the Tax Administration Act provides that any person who wilfully or negligently fails to submit a return to Sars when required to do so commits a criminal offence. As a sanction for a such criminal offence, a fine or imprisonment for up to two years may be imposed, Tax Consulting SA said.
But is there more to the inclusion of solar installers than simply ensuring that the tax rebate goes to qualifying taxpayers?
“The proposed strategic initiative by Sars, as contained in the draft public notice, is an innovative approach aimed at tackling non-compliance, as well as enabling the newly proposed tax credits for solar panels. Sars will know exactly who had the money to instal solar, and the tax refund claim promises to be seamless for compliant taxpayers,” Tax Consulting SA said.
“We know Sars is seeking ways to expand the taxpayer base, and the draft regulations also specifically reference people who do not have tax numbers, but only ID numbers. It will not be a surprise if this becomes an automatic audit trigger, as other third-party information is being used for good risk assessment and audit selection by Sars,” it said.
The deadline to comment on the draft notice closed on 14 April.
