Budget 2024: Tax Incentives Summarised

In the recent Budget Speech, the Minister addressed both the successes and concerns flowing from tax incentives, shedding light on several key points.

The research and development (R&D) tax incentive, which allows a 150% deduction on qualifying R&D expenditure, has been extended until 31 December 2033. This extension ensures the continued relevance of the incentive, particularly within sectors such as manufacturing, financial intermediation, insurance, real estate, and business services sector.

Similarly, the learnership tax incentive has been extended until 31 March 2027. This incentive offers employers additional deductions for providing further skills development through qualifying learnership agreements.

Local manufacturers of electric and hydrogen vehicles may benefit from a new incentive, introduced with effect from 1 March 2026. These manufacturers will be able to claim a 150% deduction on any new investments in production capacity for these vehicles in the first tax year of the investment.

In a bid to stimulate investment in infrastructure, the feasibility of a flow-through investment vehicle similar to trusts is being explored.

The ongoing electricity crisis necessitates revisions to the renewable energy tax incentive, in particular the provisions pertaining to generation capacity threshold and leasing restrictions. Currently, this incentive provides for solar assets with generation capacity not exceeding 1 megawatt to be written off in one year.

The employment tax incentive (ETI) is once again under scrutiny, with proposed refinements to previous amendments aimed at penalising the abuse of the scheme by certain training institutions that facilitated the claiming of the incentive for students, purporting them to be qualifying employees.  

These updates underscore the government’s commitment to fostering innovation, skills development, renewable energy utilization, and responsible investment practices within the tax framework.

Author: Barry Visser