2. 2 Energy derived from fossil fuels have a negative impact on the environment  hence a hidden economic cost Energy efficiency savings are a low hanging fruit towards addressing the problem Converting old technologies to new energy efficient technology often involves high upfront capital expenditure for long term gains 12L tax incentive is intended to encourage such investment

3. Income Tax 101 TAXABLE INCOME GROSS INCOME EXPENDITURE Income tax is an annual charge imposed on taxable income. Current charge on corporates = 28% In simple terms: EXPENDITURE ASSESSED LOSS GROSS INCOME

4. 4 12L provides a notional allowance on energy savings, calculated as follows:  Determine baseline at start of yr of assessment  Reporting period use at end of yr of assessment  Rate=45c/killowatt hour of energy savings (change as per budget 2015 budget) o Greenfield projects baseline constructed from comparable data in the sector o Brownfields baseline adjusted each year based on output achieved for that year for a given energy input Energy savings are measured by a measurement and verification professional who are accredited by the South African National Accreditation System (SANAS) Taxpayer’s can claim allowance on provision of a certificate from the South African National Energy Development Institute (SANEDI)  www.sanedi.org.za

5. 5 What type of energy savings can be claimed?  Any kind, not just electricity savings  NEW  Cogeneration  Energy generated from a captive power plant-provided greater than 35% energy conversion rate. What type of energy savings cannot be claimed?  Where concurrent benefits are claimable elsewhere  renewable sources such as biomass, geothermal, hydro, ocean currents, solar, tidal waves or wind. The allowance is designed to be conservative Who can claim 12L?  It seems any person as defined in the IT Act From when is 12L effective 12L?  12L is effective from 1 November 2013  Sunset clause for years assessment before 2020 Where can one find out more?  SANEDI website and interpretation document- www.sanedi.org.za  SARS interpretation note  2009 EM  Regulation in terms of Govt Notice No R.971  SATS 50010:2010 published by the SABS How far is SARS operationally with 12L?  Tax return is ready for 2014 year of assessment