Section 12J’s sunset clause becomes official at the end of June 2021, marking the end of this very successful tax incentive in our country.
Since 2008, Section 12J has been part of South Africa’s Income Tax Act and provided investors with an immediate tax deduction equal to 100% of the amount they have invested.
In turn, it’s been estimated that R10.34bn has found its way via the Section 12J initiative into smaller businesses, with between 9000 – 10 500 jobs having been created.
The end may be near for 12J, but there is still one last chance for you as an investor to get involved, and there’s no better way to do this than via SA’s first and only Section 12J Portfolio of Funds provider.
MeTTa Capital, which was launched in 2017, has acted as a highly respected, independent aggregator in the Section 12J asset class, bringing to market four Section 12J portfolios to date. (You can view their performance by clicking here.)
MeTTa Capital’s investment committee, chaired by the renowned Dr Adrian Saville, compiles and weights diversified portfolios of Section 12J Funds.
This unique offering has allowed investors a single-entry point access into a portfolio of market leading Section 12J investment strategies, whilst charging no additional fees to the investor for the use of their platform.
Earlier this year, MeTTa Capital launched its first High Income Fund, an offering that reduces the minimum investment requirement to just R350 000.
The round of investments for MeTTa Capital High Income Fund I came to a close on 25 February 2021.
But the MeTTa Capital High Income Fund II is open to new investments until the deadline of 29 June 2021.
The Portfolio has been designed to include investment strategies that yield stable and predictable income returns, earned off the back of strong asset underpins.
In the current low-interest rate environment and with a shortage of strong yields being achieved in traditional asset classes (such as listed equities and property), the High Income Fund II aims to provide investors with:
- Access to multiple Section 12J funds in key growth sectors (renewable energy, agriculture and infrastructure).
- An anticipated Internal Rate of Return (IRR) of 18.8% (net of fees and all tax considerations).
- An average annualised 8.3% dividend yield paid bi-annually.
- Personalised quarterly investment statements and newsletters through our reporting and distribution partner, Prescient Fund Services.
Currently Section 12J is also one of the only mechanisms to access direct renewable energy investments, and our High Income II fund allocates 47% of the portfolio to this sector to provide investors with access to the enormous growth that has been seen within this segment of the market.
Partnership with Standard Bank Wealth & Investments
During its existence, Section 12J investing has become an important asset class to consider when building a client’s portfolio.
Its significant tax and uncorrelation benefits are driving wealth managers to ensure their clients have at least a portion of their assets allocated to this asset class.
Standard Bank Wealth & Investments has been ahead of the curve by recommending Section 12J investing, as well as the important alternative asset to have within their client’s portfolio mix.
MeTTa Capital is proud to call them our partner for three years now, and we again look forward to bringing forth our comprehensive Section 12J investment solution to their clients in this last opportunity for investors.
Section 12J vs Retirement Annuities
MeTTa Capitals’ High Income II fund provides investors with a similar level of diversification that South Africans have become used to with many RA funds and other investments, but in faster growing parts of the SA economy and with key differences (see table below).
|Retirement Annuity||Section 12J Investment|
|Investment cap||R350 000 per annum||R2.5 million per annum. R5 million per company|
|Annual costs||3 – 6%||2 – 3 %|
|Tax on withdrawal||Income Tax – up to 45%||Capital Gains Tax – 18%|
|Exit||55 years of age||5 years from date of investment|
|Investment status||Members of an RA||Shareholding within Public Unlisted Companies|
Through all the years of this successful initiative, Section 12J investing has been made accessible through MeTTa Capital’s diversified access into the market’s leading investment strategies.
If you’re going to take up the final opportunity to invest in this space, we will be ready to help you every step of the way.