Recent proposals by National Treasury to cap the amount that high net worth individuals and corporates can invest in Section 12J schemes will stifle an initiative to grow small business that is starting to deliver real results, says Gadi Cohen, MD of Optomise, a Section 12J fund manager. The 12J association is of the view that some 18 000 jobs could be lost if the cap is implemented, most of the impact coming from the lower individual investment threshold.
Section 12J of the Income Tax Act, introduced in 2009, allows an investor to deduct the full amount of an investment in a qualifying business from his or her tax liability in the year in which it is made. The object of the act, in line with similar legislation in several other countries, is to provide a pool of capital for small businesses.
