Want to invest in KSE Solar 12J, but can’t afford the R1m ticket size at this stage?

*This content is brought to you by Futureneers Capital

“We can help you!” says Jaco Gerber, CFO of Futureneers Capital, a registered Section 12J Venture Capital Company with more than R300m capital under management. Futureneers has partnered with the KSE Solar to offer its investors a very unique structured 5-year payment plan to claim a 12J tax benefit of 5 times their upfront cash invested whilst the investment is underpinned by exciting de-risked commercial solar projects.

This innovative funding model now allows investors to qualify for a 100% tax deduction today based on their ability to generate cash flows in the future, even by way of earning a salary and without having to incur the full investment cash requirement upfront.

The Futureneers KSE Solar 5-year payment plan was specifically designed with an investor in mind that would have continued to invest in Section 12J every year for the next 5 years if the incentive did not come to an end, but also don’t have access to R1m cash at this stage.

How it works:

  • You wish to make a R1m 12J investment to reduce your tax liability. You however only have R200,000 free cash flow right now so therefore your section 12J investment would have been limited to R200,000.
  • However, you are employed and generate R200,000 surplus cash every year. The Futureneers 12J KSE Solar 5 Year Payment Plan now provides you an opportunity to get a Section 12J tax deduction of R1m whilst only putting R200,000 down before the end of June – that’s a tax benefit of 5 times cash invested.
  • You can now claim the full R1m against your taxable income, and assuming a maximum tax rate of 45%, you will receive a tax benefit of up to R450,000.
  • Worried about your taxable income not being high enough to take the full deduction in the current tax year – worry no further! You can carry the assessed tax loss over to the next year allowing you to take advantage of the full R1m deduction.
  • The rest of the investment is payable in 4 annual payments of R200,000 spread over the next 5 years. Taken into account that you received back R450,000 from SARS, amazingly, the payments for the next 2.25 years are already covered by the SARS Section 12J incentive.
  • The transaction is structured as a loan carrying a below prime interest rate over the full 5 years. No monthly payments are due and the steady dividend stream from the solar projects pays all your interest on the loan.
  • Depending on when you utilise your section 12J tax benefit (over one or two tax years, the underlying Solar projects generates returns of between 24%-33% p.a. measured on an IRR basis.

It is also worthwhile to note that the 5 Year Payment Plan is available to individuals, trusts and companies. Although the investment offerings start at only R200,000 per year, individuals and trusts can now maximise their Section 12J benefits up to R2.5m, paying only R500,000 per year for 5 years, while Companies get a maximum section 12J tax benefit of R5m paying only R1m a year.

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