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New Tax Break in South Africa - Does it apply to you?

14 Nov 2023
Author: Neil Helps

New Tax Break in South Africa - Does it apply to you?

South Africa has seen its first tax incentive being issued for threatened species like lions and rhinos. This incentive was spearheaded by the Sustainable Finance Coalition together with The Department of Forestry.

The Incentive aims to add to the protection of endangered animals and plants. At the moment there are many species requiring protection to avoid extinction for example, lions, vultures, cycads and other fauna and floral.

The tax incentive namely section 37C(1) of the South African Income Tax Act was made possible through the signing of South Africa's first Biodiversity Management Agreement (BMA).

The incentive enables those South Africans whose work it is to safeguard endangered species, to deduct the expenses incurred in that activity. The expenses are deductible from their taxable income.

The incentive furthermore led to the use of section 37D, the South Africa's Protected Area Tax Incentive. Section 37D allows the taxpayer to deduct the value of their land that is declared as a national park or reserve.

The new tax incentive would free up the finance required for conservation and maintenance of these threatened species. It is anticipated to free up an estimated R1.5 million per annum towards this very important cause.

The tax incentive is specific and will be a financial benefit to those who seek to protect South Africa's natural heritage.

The requirements of the new tax incentive are influenced by the BMA's that are enacted by the National Environmental Management: Biodiversity Act No. 10 of 2004 (NEMBA).

How does it work?

A BMA must be signed with DFFE for a period of five years or more. When signing a BMA the taxpayer is bound to conduct actions that are prescribed in these pieces of legislation.

The actions that need to be performed include:

  • Rangers to protect and guard areas
  • Security related expenditure
  • Veterinary professionals and related costs
  • The clearing of alien vegetation
  • Levies for associations for example those relating to conservation and maintenance

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