Section 12J investors who are exiting their investments this year, will be liable for capital gains tax, even if the investment didn’t generate a return.

For example, if an investor invested R1 million and, after the 5-year term, only received his/her R1 million investment back, the investor would be liable to pay SARS as much as R180,000.

Fortunately, investors can significantly reduce or fully eliminate this tax liability by reinvesting a portion of the capital returned from a Section 12J investment into a Section 12B tax-deductible solar investment.

Using the earlier example, reinvesting R400,000 (of the R1 million returned) into a Section 12B solar investment would allow the investor to claim a R400,000 tax deduction. This approach offsets the capital gains tax, reducing the R180,000 tax liability to zero. The investor would be left with R600,000 in cash and earning income from the R400,000 solar investment.

The alternative is for the investor to pay tax and be left with R820,000.

Jaltech manages over R800 million in Section 12B solar investments and expects to launch its next investment later in the year. If you are interested, you can register your interest here, and a Jaltech representative will contact you.