Invest in solar energy, reduce the tax bill
Invest in solar power projects that generate solid and consistent returns and lower your tax bill this year. This is the investment opportunity offered by the specialists of 12J Futureneers, through its KSE 12J investment opportunity. Time is running out to take advantage of a tax rule that allows you to deduct money from your income tax, as long as you funnel it into a South African business that benefits the national economy. In this podcast, you’ll hear Jaco Gerber from Futureneers talk about the underlying investment and why you can be optimistic about generating a healthy return. This podcast is part of a special series on 12J investment opportunities. To find out more, visit the BizNews.com 12J section and register your interest, so you can receive details of the most interesting 12J investments on offer. Click here for more information. – Jackie Cameron
Jaco Gerber on Futureneers Capital:
Futureneers Capital is a venture capital company registered under section 12J. It’s a lot of jargon, but it actually means we’re regulated by FSCA as well as SARS. What this further means, for you as an investor, is that your investment benefits from a full SARS deduction in accordance with Section 12J of the Income Tax Act.
On the underlying funds, investors can choose from:
Our philosophy at Futureneers Capital is that the investor can make his choice. They have to decide which asset they feel comfortable with [with] and understands. Once they have decided [on] the amount of capital they wish to invest in our fund, they allocate this capital to a specific asset. We provide our investor with more than one asset option.
On the financing opportunities offered by Futureneers:
The first step in the fund is to choose your asset. The second step is to choose your method of financing. Now the most normal is cash. If you are sitting on the money, you want to invest the money. But we also offer investors the option of borrowing. We have our own in-house loan company which offers financing options for investments. Then, a third option is where we allow the investor to make an investment abroad, in partnership with Sanlam Private Wealth. Then we borrow against that investment to enable a 12J South African investment.
On how this 12J investment works:
The first thing you need to realize when making an investment is that you have limited liquidity. You should consider a five year investment horizon. In fact, this means that you are not going to withdraw or sell your investment in the first five years. You are allowed to sell it, but once [do so], you have a payback potential where you have to repay SARS the initial benefit you got from the investment.
Normally, we advise our investors to take a long-term view on a 12J investment. The nature of 12J, it was structured in such a way that you pool your funds with other investors. No investor can hold more than 20% of a 12J. The idea is to pool the funds from several investments and then, as a consolidated base, to invest that money in qualifying companies.
On the underlying solar investment:
I am very excited about this opportunity. Over the past few years, we have explored various investment options. In Futureneers Capital we have different options. Over the past year, we have mainly focused on hospitality establishments. But with Covid and what [has] has occurred in the hospitality industry in recent years, we had to find [an] alternative solution for our investors.
When you start to analyze the South African space and look at the opportunities – globally and in South Africa – for renewable energy, it makes absolute sense to launch a solar solution for our investors. What we have done is partnered with experienced operators in the solar industry and present our investors with the opportunity to allocate their capital to a solar powered solution, specifically focused on solar energy. commercial and industrial space in South Africa.
The asset you choose is essential for any investment. When you look at 12J, the tax benefit is a bonus and it improves your returns. But the first essential choice that you must make is to choose your asset. Therefore, it makes sense to choose an asset with a predictable return, something with a long-term drawdown agreement – and that’s what the solar fund does.
This gives you an investment backed by assets – mobile solar panels. Also, before investing in a solar project as a 12J, we make sure that it is a long term implementation agreement. It just means that someone is going to buy all the solar energy that we produce with that asset for the next 25 years, and that is effectively the income of the investor.
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