The famous cliche of the higher the risk the higher return has just been turned on its head. Yes, an investor can now enjoy the benefit of high returns whilst limiting the risk by up to 45% on their investment.
South African Revenue Services (SARS) have passed legislation that allows investors who invest into a Section 12J company the right to deduct 100% of their investment from their taxable income in the year in which the investment is made. By SARS allowing the Section 12J deduction, investors are only to 55% capital risk (assuming that the investor is paying tax at the marginal rate).
The Section 12J opportunity is available to all South African registered taxpayers, including companies, trusts and individuals.
Investments in a professional Venture Capital Companies allow the investor the approved SARS tax deduction as well as having a professional management team sourcing, vetting and managing a diversified portfolio of investments. This formula now makes VC an asset class to be reckoned with.