In a bid to encourage financial support for entrepreneurs (or so-called ‘angel investing’), National Treasury introduced section 12J of the Income Tax Act, 58 of 1962. Effectively, section 12J allows as a deduction for income tax purposes any investment by a taxpayer in the shares of a venture capital company (‘VCC’). In other words, taxpayers are allowed a deduction equal to the amount of the share investment made in the VCC. This a significant concession. The legislation in turn requires these VCC’s to only invest in ‘qualifying companies’, being in essence companies that have ‘real’ businesses behind them (in other […]