Provided all relevant conditions are met, qualifying investors will qualify for a tax deduction equal to:
- 28% of the investment in the case of companies, and
- up to 45% of the investment in the case of trusts and individuals;
calculated at the end of the year of assessment during which the investment was made.
By way of example:
Company A has a taxable income of R10 Million and must therefore pay R2.8 Million in income tax in its current year of assessment. Company A subscribes for shares in De Novo Capital at a cost of R10 Million. The relevant investment meets all the requirements of Section 12J of the Income Tax Act. Company A is allowed a deduction, from its taxable income, equal to the total investment of R10 Million. As such, Company A has an income tax saving of R2.8 Million for the current year of assessment.
Upon transfer of funds and the acquisition of shares in De Novo Capital, an investor is issued with a share certificate, as well as a certificate evidencing the investment.
The most important condition is that the investment must be held for a minimum period of 5 years. Should the investor part with the investment during the first 5 years, the tax deduction must be refunded to SARS.
In this regard, De Novo Capital serves as a conduit. De Novo Capital does not seek investors, nor does it seek investment opportunities. De Novo Capital is project driven and dependant on the investor’s instructions pertaining to funds to be invested. Each investor or group of investors investing in De Novo Capital, is issued with a different class of shares, which in essence ring-fences (the value of) that investment. By way of illustration:
Please contact us and one of our experts will provide you with some guidance