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With just 30 days left until Jaltech’s fourth Section 12B solar Investment closes, investors have a unique opportunity to secure a tax deduction of up to 187% in this fiscal year. A key highlight of the investment is that it aims to return up to 90% of the initial investment within the first year through significant tax deductions and investment cash flows.
One material risk associated with Section 12B investments pertains to the timing of capital deployment. If investors’ capital isn’t deployed into energy-producing solar assets before the fiscal year’s end, they may miss out on their full tax deduction entitlement.
To address this risk, Jaltech will close its fourth Section 12B solar investment by month’s end, ensuring that early investors have the best chance to claim the full tax deduction.
Jaltech boasts a competitive edge with its extensive network of solar installers and developers, who weekly submit financing deals. Thanks to this network, Jaltech consistently evaluates deals totalling over R200 million monthly.
To further bolster investor confidence, Jaltech led the Section 12B investment market last year by investing R365 million across 159 solar assets.
About the investment:
Jaltech’s Section 12B IV Investment allows South African taxpayers (individuals, companies, and trusts) to participate in the rapidly expanding solar market and claim a significant tax benefit.
One of the objectives of this investment is to return up to 90% of the investment amount during the first year of investment. This is achieved through the SARS refund/tax savings associated with the investment and the first year’s income generated.
For example, if an investor (in the highest tax bracket) invests R1 million, the investor will be entitled to a SARS refund/tax saving of R562 000. Jaltech will then look to raise R500 000 of debt on behalf of the investor. The debt funding allows Jaltech to acquire additional solar equipment on the investor’s behalf, thereby permitting the investor to claim an additional tax benefit within the same year.
As a result, the same investor will be entitled to a second SARS refund/tax saving of approximately R290 000. By adding the first tax benefit, the second tax benefit, and the first year’s income, the investor will receive up to R900 000 during the first year of investment (90% of the investment amount).
Thereafter, the investment pays the investor income annually, which is generated from the sale of electricity.
For a breakdown of the forecasted cash-inflows the investor can expect, see below:
ASSUMPTIONS:
- The investor is in the highest tax bracket
- The Prime Rate remains unchanged
- Future cash flows are sold at year 10
- Debt raised at a 1:2 ratio
Jaltech’s Section 12B IV investment is closing on 31 May and has a remaining capacity of approximately R100 million for new investors. Investors interested in understanding more about Jaltech’s Section 12B investment can click here and complete the online form, and a representative from Jaltech will contact them.
Jonty Sacks & Chris McCormick – Jaltech Fund Managers
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