Ten days left: Grovest opens 24/7 taxpayer helpline in response to overwhelming last-minute demand for S 12J tax breaks

With just a few days left until the Section 12J tax break becomes a thing of the past, Grovest has been inundated with enquiries from taxpayers scared of missing out on their opportunity to unlock up to R1,25 million in free value through local investment.

In response, Grovest is on a mission to ensure that no investor who wants to make the most of this opportunity, misses out. As part of this mission, we have taken on extra client service capacity and have opened a 24-hour, 7-days-per-week taxpayer helpline, which will be active until the legislation’s final minute.

The investment incentive in Section 12J of the Income Tax Act, through which investors get up to R1 of value for every 55c invested in a qualifying fund, will come to an end at 23h59 on 30 June 2021. This means that taxpayers have just ten days left to receive up to 45c for free for every Rand they invest, even before growth in the investment is considered — a benefit the likes of which will not be seen again in South Africa in the foreseeable future.

The incentive — which was introduced into the tax legislation by government in 2009 — was designed to encourage South Africans to invest in local SMMEs in specific growth-targeted industries, by offering taxpayers substantial breaks on their income tax. Taxpayers were able to claim a deduction against their taxable income up to set limits of R2.5 million for individuals and R5 million for companies each year.

Crucially, Section 12J saw local taxpayers freely choosing to invest in growth-driving South African businesses, instead of moving money offshore or holding on to cash. In the last 5 years alone, Section 12J investments have resulted in over R5 billion worth of investment into more than 360 SMMEs, the employment and growth drivers of the South African economy. Section 12J investments have directly created over 10 500 jobs across the country, while still offering very attractive returns for investors, over and above the substantial tax benefits. All of Grovest’s Section 12J funds performed well over the pandemic, for example, outperforming many of the US Dollar-denominated foreign investments often favoured by local investors.

Unfortunately for taxpayers (and for the economy), National Treasury announced it would soon bring the incentive to an end in this year's February budget.