FAQ: Can a company reapply for a Venture Capital Company status?
Yes. If the company takes the corrective steps to rectify the non-compliance that resulted in the withdrawal of the venture capital company status, the company may reapply for an approved venture capital company status in the year of assessment following the year of assessment in which the venture capital company status was withdrawn.
FAQ: Can a company voluntarily apply for a withdrawal of their Venture Capital Company status?
Yes. The request for withdrawal must be submitted in writing and must include the following information: – The venture capital company reference number or Income Tax reference number; and – Reason(s) for withdrawal.
FAQ: What are the consequences of a withdrawal?
An amount equal to 125% of the aggregate amount contributed by investors in exchange for venture capital company shares must be included in that venture capital company’s income in the year of assessment in which such approval has been withdrawn.
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.
