Radio Investing in Section 12(J) companies

Investing in selected hospitality and accommodation facilities has a tax benefit, explains Jaltech co-founder Gaurav Nair.

NASTASSIA ARENDSE: I’m joined on the line by Gaurav Nair, who is the co-founder of Jaltech and also the MD of JSS Empowerment. As part of our Investment Unusual we are going to be talking about Section 12(J) companies and in particular how they apply to you, how you benefit if you are looking at acquiring or developing a hotel, lodge or student residence accommodation.

Gaurav, thank you so much for your time.

GAURAV NAIR: Thank you, Nastassia.

NASTASSIA ARENDSE: A few weeks ago we spoke about Section 12(J) companies, but just briefly take me through how it works.

GAURAV NAIR: Section 12(J) is a tax incentive to encourage investment into sectors. What this means is that anyone who invests into a Section 12(J) company gets a deduction from their income for tax purposes for the amount that they invest into a Section 12(J) company.

NASTASSIA ARENDSE: On the topic of developing or acquiring a hotel, lodge or student residence accommodation, how do I apply the benefits of a Section 12(J) if I’m in any of these particular sectors?

GAURAV NAIR: Anyone who is looking to either develop a new or invest into an existing investment in the hospitality sector, should do it through a Section 12(J) structure. The way that it would work is that one would approach us and we would advice them of a structure that would be compliant to invest into the sector.

NASTASSIA ARENDSE: What are some of the basic requirements that need to be met by Section 12(J) companies?

GAURAV NAIR: The basic requirement is that they have to invest in certain sectors. They are not allowed to invest into, for example, casino industries, and also the investment needs to be up to a maximum size of R50 million per investment. Really, it speaks to what Treasury is trying to achieve, which is to encourage investment into this part of the economy.

NASTASSIA ARENDSE: Gaurav Nair, thank you so much for your time.

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