Category Economy
SUB CATEGORIES General |  Budget 2017 |  Budget 2018 |  Budget 2019 |  Budget 2020 |  Budget 2021 | 

Treasury elects not to extends the Section 12J sunset clause

25 February 2021 Jonty Sacks – Partner at Jaltech Fund Managers
Jonty Sacks, Partner at Jaltech Fund Managers

Jonty Sacks, Partner at Jaltech Fund Managers

The Section 12J sunset clause has been a trending topic for Section 12J fund managers and taxpayers in the build-up to the Finance Minister's budget speech. The relevance is that when Section 12J was introduced in 2009, Treasury included a clause that would see to the incentive coming to an end at the end of June 2021.

The sunset clause was inserted in the legislation in order to provide Treasury with an opportunity to assess the effectiveness of the incentive and then to decide whether or not to extend the incentive. 

On review of the Section 12J industry’s survey, over 15 000 jobs have been created and supported, and over R4.5 billion has been invested into more than 300 SMMEs in South Africa. One would have assumed that these statistics would have supported an extension of the incentive. However, in the Finance Minister’s budget speech, Treasury has determined that: 

the incentive has not adequately achieved its objectives. The incentive has instead provided a generous tax deduction to wealthy taxpayers and most support has gone to low-risk ventures that would have attracted funding without the incentive. The incentive will therefore not be extended beyond its current sunset date of 30 June 2021.” 

The non-extension has no material impact on taxpayers who have taken up the incentive or those who intend investing before the end of June 2021. This simply means that taxpayers have a limited window, before the end of February for the 2021 tax year end and then again before the end of June for the 2022 tax year end to take advantage of the “generous tax deduction”.


Quick Polls


Covid-19 may accelerate certain industry trends. What are we likely to see?


Adoption of contactless technologies and digital experiences will likely be accelerating emerging technologies further
The consumer will expect safety and precautionary measures, driving the need for enhanced surveillance policies and technologies, which may pose potential privacy concerns
Rising activism among consumers and employees could drive an increased focus on corporate purpose
Value chain disruption is likely to lead to an increase in creative partnerships, which may in turn cause organisations to further invest in developing the mindset and agility to collaborate across sectors in the ecosystem
Cost management will be a critical priority to ensure business continuity based on cash flow requirements, to manage lower margins and revenues during a downturn
fanews magazine
FAnews April 2021 Get the latest issue of FAnews

This month's headlines

Randsomware attacks... SA businesses' biggest risk
Know the difference - compliance vs ethics
Better business by virtue of Beethoven
The future of vaccines
Harmonisation of retirement funds
Call centres and the maze of auto-prompts
The next 18 to 24 months are going to be tough
Subscribe now