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Limiting tax incentives to investment in SMEs is shortsighted

The Treasury’s proposal to cap section 12J investments will inhibit a virtuous cycle of funding, job creation and growth

By Gadi Cohen / 7 August 2019

The Treasury’s latest proposed amendments to impose a R2.5m cap on the amount an investor can put into a section 12J investment in any single year will have the unfortunate effect of limiting the funds available for small business development.

The main purpose of section 12J of the Income Tax Act, which allows investors in specified vehicles to deduct 100% of the amount invested from their income tax liability in that year, is to retain funds in SA to stimulate business growth and create additional jobs.

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