South Africa: Tax Incentive Leads to the Evolution of a New Investment Class

analysis

Section 12J is quickly becoming an important diversification option, allowing investors to invest pre-tax funds into sectors which generally have significant upside potential. Diversification has been one of the catalysts to the growth of Section 12J, resulting in more than R3-billion being invested within the past financial year, increasing the total capital under management.

Following the conclusion of the 8 May 2019 general elections, one can't help but think of the myriad uncertainties all South Africans have regarding the future of the country.

This uncertainty spans across poor service delivery, high unemployment rates, a slipping currency and dismal economic performance, with the looming threat of junk status hanging over our heads, among others. There is, however, much optimism for South Africa's local small and medium enterprises, which are catalysts for growing the local economy, generating revenue and subsequently creating sustainable jobs that have a positive implication for the lives of South African taxpayers.

This optimism is placed in Section 12J of the Income Tax Act, which was introduced by Treasury as a tax incentive for the purposes of stimulating investment in local small and medium enterprises. The incentive was first introduced in 2009 after the success of a similar venture...

See What Everyone is Watching

More From: Daily Maverick

Don't Miss

AllAfrica publishes around 700 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.