Small to medium enterprises (“SME’s”) and junior mining companies are constantly faced with development challenges, and primarily the access to equity finance. The cost of share investments which are held as capital is generally not deductible from income.
In dealing with this issue, and so as to encourage the expansion of SME’s and junior mining companies, Section 12J of the Income Tax Act was introduced as a tax incentive by government to promote equity investments via Venture Capital Companies (VCC’s).
Provided certain requirements are met, Section 12J provides for a 100% tax deduction, equal to the value of investment made in a section 12J approved VCC.
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