SARS: Striving to Aid Endangered Species

The signs are clear that if we don’t get strategic about funding conservation, saving our endangered species and meeting crucial global conservation goals might be a lost cause. South Africa’s new tax incentive for at-risk species like rhino, lion and endangered plants is a definite step in the right direction.

The Department of Forestry, Fisheries and the Environment (DFFE), in collaboration with the Sustainable Finance Coalition, has rolled out a tax incentive that rewards regular South African citizens who are looking out for endangered species. 

The welcome incentive, covering threatened species and other effective area-based conservation measures, lets any South African taxpayer, whether they are private landowners, individual trusts, or companies, deduct all expenses tied to their conservation efforts from their taxable income. 

The idea for this tax incentive came to life in 2020 through the Sustainable Finance Coalition and was tested by Wildlife Foundations Africa (WFA) in 2021 and 2022 thanks to funding from the Rhino Recovery Fund. 

The DFFE has kicked things into gear by signing biodiversity management agreements (BMAs) with three private rhino and landowners in Limpopo, locking in the tax incentives for the next five years. 

What’s unique about these agreements is that they offer unique biodiversity tax incentives for the landowners under the Income Tax Act. Essentially, BMAs allow individuals or organizations to manage a species or ecosystem in line with an approved biodiversity management plan.  

The landowners in Limpopo, who have committed to managing the southern black rhino and the African lion in open system protected areas, are on the hook for various conservation measures and the related costs. But here’s the catch, the cost they incur can be deducted through the associated tax incentive, provided they meet all the tax requirements. 

To keep things transparent the animal owners must submit annual progress reports to the minister on how well they are sticking to the BMA’s. 

Now how does that work for regular South African citizens?

If you’re doing your part to conserve threatened species and ecosystems, like rhino, lion, cycads and vultures, and there’s a published Diversity Management Plan(DMP) by the Government for it, you can qualify for the tax deduction.

Expenses tied to the conservation and maintenance of these species and ecosystems, such as alien clearing, rangers’ salaries, security and veterinary costs can be deducted.

Take for instance an Eastern Cape farmer caring for endangered cycads on his farm. Even if it is not related to his other business activities, this farmer can enter into an agreement with the government based on the Biodiversity Management Plan for cycads, which the Government already has in place. The plan outlines the base conservation actions to protect the remaining cycad population.

By signing a BMA with the minister, the farmer commits to specific conservation actions for five years such as hiring a guard, preventing invasive plants, and reporting on cycad health. In return, the farmer can deduct the expenses from his taxable income. This tax incentive is a win for South African citizens safeguarding these species even if they aren’t within protected areas and are incurring management costs.

How much can I claim back?

The tax incentive allows for expenses to be deducted as a deemed donation.  The value of the expenditure calculated is linked to the donations cap of 10% of taxable income.  

There is also an additional incentive – the South African Protected Area Tax Incentive. Now, this is the one that provides a deduction of 4% p.a of the market value of your land for a period of 25 years.  

The catch? Your land needs to be declared as a nature reserve or National Park. It’s all about supporting the national biodiversity stewardship approach, locking in protected areas through deals on non-state land. It’s throwing a financial lifeline to conservation efforts across the country.  

These incentives are a bit niche, but there’s a small tax break for South African citizens who want to roll up their sleeves to help conservation.  

When does it come into effect?

The legislation is already in place.