If you are looking to pay less tax for the 2013 financial year, it’s worth considering recent South African Revenue Services (SARS) legislation. Section 12J of the Income Tax Act allows an investor to write off 100% of their investment in a SARS approved section 12 J company from their taxable income. Usually one does not receive tax deductions for this type of investment but only on expenditure used in the production of income.
This legislation is based on the success of the Venture Capital Trusts (VCT) implemented in the United Kingdom more than a decade ago. Through Section 12 J, Government aims to stimulate the economy and promote investment in South African private companies, whilst providing tax benefits to investors.
This tax benefit effectively adjusts the risk of investing in private companies requiring growth capital while reducing the risk to 60% of the investment as a result of the tax deduction.
With a minimum investment of R100 000, investors in Grovest, South Africa’s first operational venture capital company, are able to participate in a balanced portfolio of high growth South African private companies managed by a professional team.
The Section 12J tax deduction applies to companies, trusts and individuals. Investments need to be made prior to 28 February 2014 to take advantage of the tax deduction for the current tax year.
Jeff Miller, the CEO of Grovest, explains: “We are investing in high quality, small and medium sized private companies across diverse industries and sectors with excellent growth potential. We have a strong pipeline of potential high return investments and we are raising additional capital to fund these opportunities”
“Any investor who would like venture capital exposure as part of their portfolio should consider a professional venture capital fund such as Grovest. The tax deduction now makes this alternative asset class an extremely compelling investment choice.”
The Grovest team has recently been bolstered with the addition of Clive Butkow, Accenture South Africa’s former COO, to the board of directors. Grovest’s seasoned venture capital and private equity experts including Butkow, Malcolm Segal, Jeffrey Livingstone and Jeff Miller have each committed R2m of their own funds to the venture.
Miller continues, “We have been working with SiMODiSA, a collaborative movement to accelerate the entrepreneurial landscape in South Africa, initiated by finance minister, Pravin Gordhan and Pieter De Villiers, the founder and CEO of Clickatell – the world’s leading mobile messaging provider. In line with the National Development Plan we envisage additional advantageous amendments to section 12 J in the short term.”
Investments in Grovest can be made via financial advisors or directly through the company. Visit www.grovest.co.za for more information and to download the private placement memorandum and application form. Grovest is registered financial service provider. It is also registered with SARS as a venture capital company (VCC).