Section 12J of the Income Tax Act was created to incentivize investors to invest in new projects within South Africa. Taxpayers who invest in a registered Venture Capital Company (VCC) are entitled to a 100% tax deduction on monies invested, thereby achieving an immediate return of up to 45% for individuals, 45% for trusts and 28% for companies on their investments.

These types of investments are extremely lucrative and the positive cash flows that result from a well-structured VCC investment are matchless.

The investor can receive a full tax deduction on the funds invested, and receive substantial dividends from this investment on an ongoing basis. An investment in 12J carries no personal tax risk for the investor. It is simply not possible to be penalized for taking advantage of this government opportunity.

Provisional tax – 28 February 2018

Second provisional tax returns for all registered provisional taxpayers (Individuals and companies), are due on or before 28 February 2018. Herewith a guideline on how to calculate your second provisional amount due:

Taxable income equal to or less than R1million
The provisional tax may be calculated on the lower of the estimated taxable income for the year, or the basic amount (see definition below), less the first provisional payment and any employee’s tax. Penalties apply if the estimate of taxable income is less than 90% of taxable income for the year and less than the basic amount.

Taxable income of more than R1million
The provisional tax must be calculated on the estimated taxable income for the year, less the first provisional payment and any employee’s tax. Penalties apply if the estimate of taxable income is less than 80% of actual taxable income for the year.

Penalties are calculated at 20%.

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