If you break down the monetary calculations of a Section 12J investment, now available to taxpayers in South Africa, don’t lose 100% tax deduction available for individuals, companies, and trust;

Many investors and financial advisors don’t fully understand the workings of SARS 12J tax incentive, which incidentally has a cut-off date of June 2021.

Think about this: 100 per cent of what you earn can be tax-deductible via the 12J structure. Since the introduction of the limit to the total amount permitted to be invested annually (those in the know were taking advantage) an individual still has the opportunity to invest R5 million (R2.5 million this year and R2.5 million in 2021) and a company is limited to R10 million (R5 million this year and R5m next year). So, essentially, if you are an entrepreneur who owns your own company, you can easily – and legally – enjoy a R15 million tax deduction.

Salary earners, too, need to be taking advantage of the structure. Let’s say you earn R1 million per annum; you are permitted to invest R2.5 million per annum into a Section12J fund (so a total of  R5 million investment cap over the next two years). If you invest the R5 million, you’ve created a tax loss that will shield the next R5 million of your salary. In other words, you will pay no tax for the next 5 years! SARS will reimburse you your monthly tax deductions when you submit your tax return.

Diversified, Dynamic and Ethical – Olive Venture Capital Company Limitedan authorised S12J Investment Company

When our clients do finally catch on to this Tax Haven window, they’re looking in all sorts of places for some money to invest. At Olive Venture Capital Company Limited, we are investing in a Diversified Portfolio that is shariah complaint with a targeted return of 17% per annum (after tax) over 5 years, YES, 17% per annum.

Rather than conjuring up clever and expensive ideas of how to avoid paying tax, just find a decent Section 12J fund and shield it?

BUT, more importantly, we must not forget that the intention of Section 12J is to stimulate investment into certain sectors of our economy with the end goal of creating jobs. Any South African investor, especially in these trying times, who has the opportunity to invest would be missing a huge opportunity to boost the economy, be a part of the solution and take complete advantage of the short-lived tax haven status we are currently legally enjoying.