Section 12J is an investment tax incentive designed to create jobs and boost the local economy by encouraging investment into a range of private companies which meet defined criteria. The incentive gives taxpayers the ability to write off 100% of their investment against their taxable income in the year they invest.
Investors benefit from up to 45%* immediate tax relief, reducing the cost of the investment, providing downside protection and enhancing overall returns.
*at the maximum marginal South African income tax rate
our 2022 investment strategies
The Westbrooke Aria strategy provides growth capital to a portfolio of low-risk, asset-backed rental businesses, with contractual revenue streams in partnership with experienced and reputable operators to ensure alignment of risk and reward.
Westbrooke Stac (“Student Accommodation”) Preferred is the next phase in the evolution of Westbrooke’s successful c.R900 million Westbrooke Stac investment strategy. In the context of a challenging economic climate, Westbrooke Stac Preferred seeks to reduce risk and enhance alignment by investing in a preferred position in the student accommodation equity capital stack.
the westbrooke advantage
SA’s largest S12J fund manager with over R3bn in S12J AUM across more than 1, 300 investors and
4 investment strategies
Successful investor exits at double digit returns, with our Aria 2016 vintage having recently achieved liquidity whilst outperforming local and international benchmarks
Demonstrated ability to invest S12J capital at scale by leveraging off the wider Westbrooke deal team, with more than R1.8bn successfully invested across 65 SMMEs
Significant shareholder and management capital invested alongside our clients, promoting alignment within the S12J investment strategies
Track record of performance, with investor dividends having been paid throughout the Covid-19 pandemic
Co-founder and Chair of the 12J Association of South Africa, leading the direct engagement effort with National Treasury and Parliament
frequently asked questions
what is a Section 12J company?
A Venture Capital Company as described in Section 12J of the Income Tax Act, which came into operation with effect from 1 July 2009. Section 12J is a tax-based incentive designed to encourage individual and corporate investors to invest in a range of small and medium size companies by investing through Section 12J.
The aim of the incentive is to create a pool of passive investors who obtain an upfront tax deduction for investing with a manager who is responsible for making investments which stimulate the South African economy and create jobs.
when can the tax deduction be claimed?
An investment into an approved Section 12J company is 100% tax deductible in the tax year you invest.
can the tax relief be recouped by SARS?
Your Section 12J deduction will only be recouped (and the tax relief withdrawn) if:
– you sell your shares within 5 years of being issued; or
– your Section 12J fund manager fails to meet the various investment compliance requirements contained within Section 12J of the Income Tax Act.
how can I obtain my tax relief?
Investors can claim their tax relief by either reducing their estimate of taxable income when submitting provisional tax returns or by obtaining a tax refund through the annual income tax assessment.
what do I need to give SARS or my tax advisor to claim the deduction?
When investing, Westbrooke will provide each investor with a tax certificate which is used as evidence of their investment into an approved Section 12J company.
what is the annual limit per investor for subscriptions into a Section 12J company?
There is an annual investment limit of R2.5m per individual / trust and R5m per company.
does a section 12J investment carry risk?
As with any private equity investment, an investment in a Section 12J company carries risk. It is important, therefore, to assess the investment strategy of the Section 12J company to ensure you understand the associated investment risk as well as the expertise and track record of the asset manager.
what is the term of my investment?
The term of the investment will be a minimum of 5 years, with a realization period of up to 18 months thereafter (if required).
how long does the S12J incentive last for?
The VCC regime, introduced in 2009, is subject to a 12-year sunset period that ends on 30 June 2021. The upfront income tax relief will only apply to VCC shares acquired on or before 30 June 2021. The sunset clause is to be reviewed, and may be extended thereafter.
what is the size of the S12J industry?
According to the Section 12J Association of South Africa, there has been in excess of R9 billion raised into the Section 12J industry. Westbrooke is SA’s largest Section 12J fund manager, managing over c.R2.7 billion of the capital raised in the industry to date.
can I use debt or gearing to make an investment into a s12j company
Yes, you may utilise a loan / gearing to make an investment into a VCC, subject to complying with Section 12J(3)(a) of the Income Tax Act.