Estate Living Magazine Invest SA - Issue 45 September 2019 | Page 40

I N V E S T
&
D E V E L O P
PROPERTY DEVELOPMENT AND
SECTION 12J
The Section 12J tax allowance has introduced an exciting new asset class that has attracted over R6 billion within a
very short period of time. Let’s explore how this can benefit developers.
What is Section 12J?
In short, Section 12J investments are a way to boost the economy by
providing a tax incentive for investors. The capital raised is used to fund
local small and medium-sized enterprises (SMEs) that are believed to have
long-term growth potential. The aim is to encourage investors to participate
in the capitalisation of these businesses, which will stimulate economic
growth and create jobs. The benefit to investors is that they can see a return
on their full investment as well as a tax deduction on the amount invested.
This differs from equity shares traded on the stock exchange, as Section
12J investments are essentially private equity shares. These usually have a