Initiated by SARS in 2009, Section 12J of the Income Tax Act is a tax incentive aimed at boosting business via investment into the venture capital sector. By stimulating new businesses in South Africa and, in turn, job opportunities, Section 12J essentially offers investors an immediate tax break via investment into a Section 12J Venture Capital Company (VCC).
Section 12J investments are popular among high-net-worth investors and professionals who have investable income, salary earners who would like a tax refund on annual PAYE, or directors looking to ease their tax burden on dividends paid. The deduction you can claim is the full amount you invest, which is why this has proved an exciting new asset class, attracting over R6bn since it was introduced.
When 12J hit our radar, we immediately pursued the structure as an option for our investors. We have researched, posed all the questions and considered all the scenarios, structures and options, and, as a result, together with the team at Anuva Investments, have created an exceptional investment product.
Remember, the purpose of Section 12J is to fund small- and medium-sized enterprises that are believed to have long-term growth potential, with the aim of stimulating economic growth and creating jobs, which is a top priority for us too! Our investment mandate is to invest in quality hospitality opportunities (we’re in that space already). Our strategy is to find outstanding opportunities in the property sector, good quality, strategically located hospitality properties with a focus on sectional-title serviced apartments and student accommodation.
Flyt Property Investment has a very exciting pipeline of projects. We’ve already structured our projects with the investor in mind and our developments come with a complete management solution and an experienced operator in place.
Now, with our Section 12J investment available via the Flyt Hospitality Fund, our investors (or buyers) can purchase a unit outright directly or they can opt for the section 12J version and take the tax break via the hospitality fund. The fund invests into the Flyt projects until fully subscribed and/or sold out, after which we do what we do best and go on the hunt for new opportunities.
An investment in Flyt Hospitality Fund is more than just a tax break. We love the 12J incentive because we believe that it is an opportunity to participate in Government’s policy of job creation, all the while providing our investors with attractive returns and a viable exit strategy. For every R1million invested 4.1 jobs are created. Who wouldn’t want to be part of that growth?
In a nutshell:
|Tax deduction:||100% of invested amount|
|Benchmark ROI:||11% pa|
|Distributions:||Zero during first 5 years
Quarterly after 5-year period
|Geared:||Yes, up to 40% loan via Investec Private Bank|
We’re all about relationships at Flyt, and finding the right partner for the Section12J journey was an important project for us. We didn’t want to find a typical service provider, we were actively looking for a 12J partnership, someone to walk the road with us. Enter Anuva Investments, one of South Africa’s most respected and established Section 12J Funds and our partner at Flyt Hospitality.
Anuva ticked all the boxes for us:
Flyt Hospitality and the team at Anuva are involved in the investment process from the ground up. Opportunities are considered jointly and, once these are identified, Anuva do what they do best and that’s manage, administer and look after our investment, leaving us to we do what we do best: manage the development and management of the property asset.
Download our Private Placement Memorandum (PPM) for more info.
You can also fill in an application to invest or send us an e-mail and our investment team will be in touch.
Section 12J of the Income Tax Act – the most efficient tax saving tool, provided by SARS and government that allows you to hold on to your tax cash while investing it wisely.
The section specifically aims to help the growth of small and medium sized businesses by increasing their access to equity finance. To attract investors into this typically under-funded sector, which is imperative for driving economic growth, SARS has written Section 12J into the Tax Act, which offers taxpayers a 100% tax deduction in the year of investment if they invest in SMMEs by way of subscription of shares in a Section 12J Venture Capital Company.
Flyt’s Section 12J compliant property developments give investors the full 12J tax deduction, allowing them to put this saving/refund towards their property purchase. This means that SARS will effectively fund up to 45% of the purchase price of the property.