Get a 100% tax deductable with a 12J Investment

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What Is Section 12J

Smart, Innovative Investments

About Us

Smart, Innovative Investments

Expatti is an innovative investment consulting company whose ideals are fundamentally based on a combined sixty years’ extensive and in-depth experience in the Investment and Cost Engineering field.

Building its reputation on elegant and innovative investment concepts, the company has seen many a fruitful and highly profitable returns in their vast clientele base, adding immeasurable value to their service offering proposition.

Our Services

Smart, Innovative Investments

Zero TAX Initiative

Expatti offers a unique set of services, of which the most prominent is the zero-tax incentive for the investor. This single benefit ensures a maximum return on the investment, irrespective of its size.

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Paying over and above the investment return, the investment value grows substantially each year. This generates an immeasurable value proposition to any investor, or prospective investor by promoting a passive income generative with re-investment, after the initial investment period.

Designing an investment plan unique to each investor, molding the portfolio to best suit the individual need of the client, promotes growth, passive earnings and the invaluable benefit of a zero-tax incentive.

In keeping with client expectations, but remaining steadfast on minimum risk, the company has placed it’s trust in the property industry, recognizing the steady, but indisputable growth in this market, which offers safety, but guarantees stability and fiscal expansion.
Having tailored a three-step investment strategy, the company’s initial investment will be based on a stable, low-risk niche, to guarantee the return they have endeavoured to procure.
With the initial investment strategy has run its course, Expatti reinvests in larger, lucrative opportunities, where the proceeds exceed standard gain and places its client in a fundamentally prosperous position, to reinvest in more aggressive markets and niches, further expanding their wealth.

Motivated by each investor’s unique financial portfolio, Expatti designs an investment plan that promotes growth and earnings, own to the investor, and tailor-made to their needs.

Capital Growth on Investments

The fund offers a unique opportunity to invest in projects secured by the Expatti Fund. Procuring units in the market as per the conventional development process, Expatti negotiates substantial discounts on behalf of the investors and further maximises the returns.

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Further to this, the Firm secures, vets and places tenants, finalizing the rental income section of the value-added benefits.

Having built and upheld cemented relationships with Rental Specialists, Expatti accesses the rental pool effectively, and securely, without any risk to their clients.

This places investors in a position of absolute low risk, while offering the best rental specialists, managing their properties. The Expatti fund enjoys preferential treatment as a buyer of large Student accommodation developments with proven systems and procedures, which ensures the most lucrative investment possible for their clients:

This is managed in that:

  1. The highest yielding units in any given project are selected and acquired by Expatti and
  2. The fund has a targeted return of 15% per annum which renders is one of the best performing property funds on the market.

Investing in Low Risk Property

The Expatti Hospitality Fund is a Section 12J compliant company. The Fund exclusively invests in Hospitality properties developed for student housing.

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Situated in Potchefstroom, renowned for its world class University and student housing developments, the company offers investors high quality student accommodation properties.

Limiting their investing only to fully completed units, ensures rental return from inception of the investment and excludes risk in terms of development obstacles that could jeopardize the investment return.

The minimum investment sum is R1 000 000.00. Expatti understands that these lump sums are not always readily available to invest, and therefore have devised safe, secure, and low interest capital provision through a reputable sister company. No surety is required for up to 40% of the investment sum borrowed, making this an accessible benefit to a vast majority of their clients.

The financial services providers set a limit of 80% of the investment, to safeguard the fund. With the ultimate objective being to save their clients’ money, you can trust that the financial provision option secures only profitable gain over the investment term.

Our Projects

Smart, Innovative Investments

CHATEAU LYON

College Avenue

lattitude2mienehoff

LIVING @ JOOSTE

Interesting Facts

Smart, Innovative Investments

What’s happened to 12J FUND since 2015?

 

The Section 12J incentive has grown exponentially over the last five years, from having 25 VCCs approved by SARS at the end of 2015 to about 180 in 2020. These VCCs have invested over R5 billion into various SMMEs and have created in excess of 10,500 jobs across the country. The underlying investees have generated in excess of R1.5 billion in turnover.

The Section 12J legislation will cost the fiscus significantly less than the up-front tax deductions afforded to investors and, given time, may be able to generate more tax revenues than the initial deductions allowed.

 

In a very short space of time, Section 12J has created an approximate 10,500 jobs (and has the potential to create an approximate 45,000 jobs based on the quantum of capital raised) at an average cost per job which is well below local benchmarks.

Question:

What percentage of investors do you believe would not otherwise have invested their capital in South Africa SMMEs had it not been for the attractiveness of the S12J tax incentive?

Response: 82% incremental – in other words
82% of investors have followed the 12J Fund route, simply based on the 0% Tax deduction.

Best Features

Smart, Innovative Investments

ZERO TAX for individual (PAYE)

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  • This service is for PAYE (Pay as you earn) individuals looking to reduce their tax on salary to zero.
  • We enable South African taxpayers to have an investment vehicle that will reduce their taxable income to Zero. This investment is capped at R 2 500 000 for individual persons.
  • The fund has the option for investors that does not have the full amount available to invest to lend the capital through one of our sister companies.
  • No surety option for capital borrowed is a maximum 40%
  • With surety this amount is up to 80% of the amount to be invested could be borrowed.
  • After the Duration of the investment we offer that Income earned could be payed out as cash to the investor.
  • After the Duration of the investment, the investor will have the option to take over property to the value of the investment and continue the strong growth that the property has had for the term.
  • After the Duration of the investment, the income option where the investor could stay in the fund and earn a passive income to live off.

ZERO TAX for Corporate businesses

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  • Corporates looking to reduce their tax liability on large amounts of income.
  • Companies that has to pay tax on income earned will have the option to pay zero tax on a large investment sum. This investment is capped at R 5 000 000 for companies.
  • The fund has the option for investors that does not have the full amount available to invest to lend the capital through one of our sister companies.
  • No surety option for capital borrowed is a maximum 40%
  • With surety this amount is up to 80% of the amount to be invested could be borrowed.
  • After the Duration of the investment we offer that Income earned could be payed out as cash to the investor.
  • After the Duration of the investment, the investor will have the option to take over property to the value of the investment and continue the strong growth that the property has had for the term.
  • After the Duration of the investment, the income option where the investor could stay in the fund and earn a passive income to live off.

ZERO TAX for Individuals
(Provisional Tax payer)

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  • Provisional taxpayers to enable a zero tax payment.
  • The fund has the option for investors that does not have the full amount available to invest to lend the capital through one of our sister companies.
  • No surety option for capital borrowed is a maximum 40%
  • With surety this amount is up to 80% of the amount to be invested could be borrowed.
  • After the Duration of the investment we offer that Income earned could be payed out as cash to the investor.
  • After the Duration of the investment, the investor will have the option to take over property to the value of the investment and continue the strong growth that the property has had for the term.
  • After the Duration of the investment, the income option where the investor could stay in the fund and earn a passive income to live off.

ZERO TAX for Foreigners
working in S.A

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  • We provide a tax haven to foreigners and South African expats looking to reduce their taxable income to Zero.
  • Foreigners looking to eliminate their income tax payment in South Africa.
  • The fund has the option for investors that does not have the full amount available to invest to lend the capital through one of our sister companies.
  • No surety option for capital borrowed is a maximum 40%
  • After the Duration of the investment we offer that Income earned could be payed out as cash to the investor.
  • After the Duration of the investment, the investor will have the option to take over property to the value of the investment and continue the strong growth that the property has had for the term.
  • After the Duration of the investment, the income option where the investor could stay in the fund and earn a passive income to live off.
  • With surety this amount is up to 80% of the amount to be invested could be borrowed.

Zero Capital Gains TAX

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  • Capital Gains tax on property or other related assets including shares where the owner has made a profit that subsequently needs to be taxed by the receiver of revenue.
  • The fund has the option for investors that does not have the full amount available to invest to lend the capital through one of our sister companies.
  • No surety option for capital borrowed is a maximum 40%
  • With surety this amount is up to 80% of the amount to be invested could be borrowed.
  • After the Duration of the investment we offer that Income earned could be payed out as cash to the investor.
  • After the Duration of the investment, the investor will have the option to take over property to the value of the investment and continue the strong growth that the property has had for the term.
  • After the Duration of the investment, the income option where the investor could stay in the fund and earn a passive income to live off.

Zero TAX for Expats

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  • Expats working outside of South Africa to not have to pay a Expat tax as instituted by Government in Feb 2020.
  • The fund has the option for investors that does not have the full amount available to invest to lend the capital through one of our sister companies.
  • No surety option for capital borrowed is a maximum 40%
  • With surety this amount is up to 80% of the amount to be invested could be borrowed.
  • After the Duration of the investment we offer that Income earned could be payed out as cash to the investor.
  • After the Duration of the investment, the investor will have the option to take over property to the value of the investment and continue the strong growth that the property has had for the term.
  • After the Duration of the investment, the income option where the investor could stay in the fund and earn a passive income to live off.

FAQ

 

What is Section 12J of the Income Tax Act?

The South African National Treasury is incentivising tax-payers to invest in the economy via an approved Section 12J Venture Capital Company (Section 12J VCC). Section 12J of the Income Tax Act allows an investor to deduct the full amount invested in a Section 12J VCC from their taxable income for the specific tax year.

The investor will benefit from both the tax deduction and a return on the investor’s full investment. By way of illustration: if an investor invests R1 million into a Section 12J VCC (assuming a maximum marginal tax rate for an individual), the investor will receive a tax credit of R450,000 on the submission of their tax return for the year in which the investment is made. Effectively an investor’s risk exposure will be 55% while earning a return on 100% of their investment

What is a Section 12J VCC?

It is a pre-requisite for Section 12J VCCs to register as a Financial Services Provider (FSP) with the Financial Sector Conduct Authority (FSCA) and all Section 12J VCCs need to be approved by the South African Revenue Service (SARS) as a Venture Capital Company.

Section 12J VCCs manage investments in qualifying companies with the single objective of stimulating investment in local small to medium enterprises (SMMEs) with the ultimate aim of leading to GDP growth and job creation.

What type of Businesses is a Section 12j Company allowed to invest in.

Section 12J of the Income Tax Act allows Section 12J VCCs to invest in most industries although some are prohibited.

If any of the following elements exist the Section 12J VCC will not be allowed to invest in the target company:

  1. The gross asset value of the target company exceeds R50 million on the date of the investment by the Section 12J VCC;
  2. The target company earns more than 20% of it income from investments;
  3. The target company operates with a majority of its trade outside of South Africa;
  4. The target company carries on one of the following “impermissible trades”:
    1. any trade carried in respect of immovable property, other than a trade carried on as a hotel keeper (i.e. student residences and serviced apartments comply);
    2. any trade in the financial services sector (e.g. banking, insurance, money-lending, etc. this does not prevent a Section 12J VCC from investing in technology relating to these sectors);
    3. any trade carried on in respect of financial or advisory services including legal services, management consulting services and auditing or accounting services; and
    4. any trade carried on in respect of gambling, liquor, tobacco, arms, or ammunition.
Who can benefit from this section 12j zero tax incentive?
  • Any South African tax payer is allowed to benefit from a Section 12J tax deduction. Therefore. Anyone that pays tax in South Africa (i.e. foreign or local companies, individuals and trusts) may invest in a Section 12J VCC and claim the deduction.
  • Any South African looking to earn a passive income on funds invested over a medium term investment.
  • Any South African that would like to build up a portfolio of investments in the property sector without having to physically manage the investment and still receives the growth associated with the real estate industry.
  • Expats working abroad that is now part of the newly established Expat Tax law.
  • South African citizens that have sold a property and have Capital gains tax on the property that was sold.
Is and investor allowed to use debt funding to invest in a section 12j company and still have the Section 12j tax deduction advantage?

Yes. However, the investor should be liable for settling the outstanding debt regardless of whether the returns generated by the investment are adequate to settle the repayment of the debt.

How does an investor exit his investment?

Should the investor decide to leave the fund after the required 5 year period then the following options will be available:

Cash Option-Sell the shares back to the fund at the prevailing NAV

Property Option-Buy well managed assets that is generating a considerable income for the owner.

Income Option-Stay in the fund and earn passive income

Investments in VCC’s should be seen as medium term investment. Should the taxpayer dispose of VCC

shares within 5 years of making the investment, a recoupment will be included in his or her taxable

 

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