Green buildings to get more tax perks
Commercial real estate owners could soon get a tax write-off 115% of the cost of energy-efficient equipment.
That is one of several environmentally-friendly tax proposals contained in this year's annual national budget proposals, presented to the South African Parliament on Wednesday.
The three-year 50:30:20% accelerated depreciation allowance for investments in renewable energy and biofuels production could be expanded so that companies can effectively write off 115% of the value of the equipment, if National Treasury gets its way.
It is proposing that investments by companies in energy-efficient equipment should qualify for an additional allowance of up to 15% on condition there is documentary proof of the resulting energy efficiencies (after a two- or three-year period).
Officials are still working on the details and there will be a consultation process in order to establish which equipment will qualify for the tax perk.
"A number of environmental statutes and regulations require the private sector to eliminate inefficiencies in the use of energy, water and raw materials. To complement these measures, market-based instruments are playing a greater role," says Treasury.
Environmental fiscal reform has been identified as a national political priority because South Africa is involved in the post-2012 Kyoto Protocol negotiations.
Other environmentally-friendly tax measures outlined in Wednesday's National Budget include a hefty light-bulb tax, a higher levy on plastic bags and ad valorem excise duty tweaks aimed at taking into account carbon emissions.
Tax clarity on certified emission reductions (CERs), which recognise progress in reducing the release of greenhouse gases into the atmosphere, is also on the cards.
National Treasury has recognised that uncertainty about the income tax treatment of CERs "may be one reason for the slow take-up of clean development mechanism projects in South Africa".
It said it is proposing that income derived from the disposal of primary CERs is tax-exempt or subject to capital gains tax instead of normal income tax. Secondary CERs are to be classified as trading stock and taxed accordingly.
"At the domestic level, environmental challenges [are] likely to be aggravated by economic growth if natural resources are not adequately managed," said the Treasury.
Its concerns include excessive greenhouse gas emissions, large-scale release of local pollutants resulting in poor air quality, inappropriate land use leading to land degradation and biodiversity loss, deteriorating water quality and increasing levels of solid waste generation.
"While everyone feels the effects of environmental degradation, the impact of such deterioration on poor communities, particularly those sited near industrial areas, is often severe," it said.
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[Use our simple MoneywebTax calculator to work out your income tax deductions for 2009, as well as what you're currently taxed.]
[Also see our BUDGET 2009: Pocket tax guide]
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