FAQ: Are there any special tax benefits for investees?
No. The standard tax rules will apply.
FAQ: Who qualifies to be an investee?
Any ‘qualifying company’ as defined in section 12J of the Income Tax Act, No. 58 of 1962, as amended, which the approved venture capital company will invest in, in order to own ‘qualifying shares’. A company that meets all of the following requirements will qualify as a qualifying company (investee): The Investee must be a company which […]
FAQ: How does an investor support the claim for a deduction?
On request from SARS, the investor must verify a claim for a deduction by providing a venture capital company investor share certificate that has been issued by an approved venture capital company, reflecting the amount of the investment and the year of assessment in which the investment was made.
FAQ: How is the deduction recouped?
The deduction is recouped (under the general recoupment rules of section 8(4) of the Income Tax Act, 1962), if a taxpayer disposes of the venture capital company shares within a period of five years from the date of acquisition of the venture capital company shares.
FAQ: Are there any limits to the tax deductions that investors can claim?
Yes. From 21 July 2019, investments made by natural persons and trusts will be capped at R2.5 million and for companies, investments will be capped at R5 million. This cap is per tax year. Where any loan or credit is used to finance the acquisition of a venture capital share and remains owing at the […]
FAQ: Who qualifies to be an investor?
Any taxpayer (natural person / trust / company) who invests in an approved venture capital company in exchange for venture capital company shares.
FAQ: Are there any tax benefits to the Venture Capital Company incentive?
Yes. Investors can claim income tax deductions in respect of their investments in approved venture capital companies.
FAQ: Are there any additional requirements to be met by an approved Venture Capital Company?
Yes. The company must satisfy the following additional requirements after the expiry of 48 months commencing on the first date of the issue of venture capital share: A minimum of 80% of the expenditure incurred by the Venture Capital Company to acquire assets must be for qualifying shares, and each qualifying company (i.e. investee) must, immediately after […]
FAQ: What are the preliminary requirements to be met to become an approved Venture Capital Company?
A company must meet all the following preliminary requirements to qualify for an approved venture capital company status for each year of assessment: The company must be a resident; The sole object of the company must be the management of investments in qualifying companies (i.e. investees); The company’s tax affairs must be in order; The […]
FAQ: What happens after the VCC application form has been submitted?
SARS will assess the application form to determine if the company meets the requirements. If the application is successful, a venture capital company reference number will be allocated and an approval letter will be issued to the applicant. If the application is not successful, a rejection letter will be issued to the applicant stating the […]
