Frequently Asked Questions
The Power of Partnership. The Confidence of Clarity.
Individual
Section 12B is part of the Income Tax Act No. 58 of 1962. You can access it via the SARS website.
- Individuals (PAYE and Provisional taxpayers)
- Companies
- Trusts
As per SARS Binding Ruling: BCR 088, it is the chosen vehicle in order to qualify for the Section 12B deduction.
The Unlimited/General Partner assumes all operational and financial responsibility.
No. You are only liable for your own commitment.
As a registered South African taxpayer, you invest through participating in our dedicated limited partnership structure.
The Unlimited/General Partner, will assist with:
- Providing all documentation for signature
- Ensuring your tax submission includes your qualifying investment.
- If required, we will help you to submit your tax return timeously
Yes. Companies and Trusts invest through a similar en commandite partnership structure, tailored to meet their unique compliance and tax requirements.
The minimum investment amount currently stands at R350 000.00 (Capital/Investment Loan Amount ‘Partner’s Interest’).
Yes. Either 10% of your expected Section 12B tax credit/refund, to a maximum of R25 000.00 based on your taxable income.
The Securing Deposit is the advance payment to secure your placement in the Section 12B partnership for that tax year.
Yes. The deadline is the last day of February of the SARS tax year; however early commitment is advised due to limited availability and an implemented first come first served basis queuing process.
You will need to reapply in the next tax year and sign a new onboarding pack.
This will be handled on a case-by-case basis. Preference is given to full applications. Payment terms may be negotiated.
Your loan amount is calculated on your net annual taxable income (after all deductions), and you will be liable to pay over the full refund attributed to your Section 12B deduction.
The income and cash flow from the partnership business will service and repay the balance of the loan. The primary income for the partnership is derived from customers who pay for the use of the electricity.
Yes. Additional investment is encouraged, as your returns (distributions) from this limited partnership structure will exceed that of the fully geared limited partners.
- Commitment to Participate in an en Commandite Partnership: Alternative Energy Business
- en Commandite Partnership Agreement
- Deed of Adherence
- Schedule 1 – Annexure “A” to the Deed of Adherence
- Loan and Cession Agreement
- And provide the required FICA and Supporting Documentation
Yes. You may invest in each financial year to which you will receive a tax benefit each time.
Returns are calculated according to the profitability of the partnership on an annual basis. The nature of the partnership setup costs, and the funding covenants agreed between the partnership and the commercial funder has historically resulted in losses being incurred for the first 2 – 3 years. When profitable, distributions are paid out annually according to your participation percentage, for the remainder of the partnership duration.
You will be eligible for disbursements (returns) once the partnership starts to make a profit.
Yes, Income received by limited partners must be added to the annual income for that tax year.
Section 12B investments do not require a tax certificate to be issued. Your participation percentage will be calculated and communicated to you to report to SARS when submitting your tax return.
Unless SARS makes substantial changes to Section 12B, our experience since 2023 has been that SARS has not declined to refund investors unless SARS chooses to audit such an investor which could delay the paying of the Section 12B tax credit/refund.
- Changes in SARS tax policy or Section 12B legislation is the most likely risk to be experienced
- Prolonged losses being incurred by the partnership due to an uncontrollable act that leads to force majeure (act of God)
Once your annual tax return has been submitted, you should receive your Section 12B credit/refund from SARS within 10 – 14 working days.
The partnership will exist for a total of twenty-one (21) years from commencement.
No withdrawal is permitted from the partnership within the first 4 years. Early withdrawal may result in a recoupment of the S12B deduction.
Your partnership interest can be transferred to your nominated heirs according to your onboarding pack.
Company and Trust
Yes. Both Companies and Trusts qualify to participate in our Section 12B investment structure, provided they are South African taxpayers.
An en Commandite Partnership is a limited partnership structure where Companies or Trusts join as Limited Partners, contributing capital and share in the profits. The Unlimited Partner manages the business and bears the liability.
No. Entities that do not pay income tax in South Africa such as PBOs, exempt institutions, or non-profits are not advised to invest.
Yes. Entities may invest in multiple tax years as participation is structured annually, this is subject to SARS and compliance requirements.
Yes. Both Companies and Trusts may claim the accelerated depreciation under Section 12B of the Income Tax Act for qualifying alternative energy assets in the year the asset is brought into use.
Yes. If the Section 12B deduction exceeds the Company’s taxable income for the year, the result will be an assessed loss. This loss is carried forward and can be set off against future taxable income in accordance with SARS provisions.
The investment is reflected as a loan amount (Partner’s Interest) until the tax refund is received and applied. Over time, distributions from the partnership are recognised as income.
Yes. Distributions received by a Company or Trust from the partnership must be included in its gross income for the relevant tax year.
Yes. Trustees may retain the tax benefit and returns within the trust, subject to the trust deed and applicable tax laws.
Yes, Trustees may distribute the benefit, provided it aligns with the trust deed and SARS rules.
The minimum investment amount currently stands at R500 000.00 (Capital/Investment Loan Amount ‘Partner’s Interest’). There is no upper limit, however the loan amount provided must not exceed the projected taxable profit for the relevant tax year.
Yes. The Initial Deposit secures participation. Details are provided in the Commitment to Participate in an en Commandite Partnership Document.
The loan amount is based on the expected tax deduction relative to the taxable income of the entity. The indicative calculation is done during the onboarding process.
- the Commitment to Participate in an en Commandite Partnership: Alternative Energy Business;
- the en Commandite Partnership Agreement;
- the Deed of Adherence;
- the Schedule 1 – Annexure “A” to the Deed of Adherence;
- the Loan and Cession Agreement; and
- provide the required FICA, Supporting Documentation and Board/Trustee Resolution (as applicable)
The Section 12B tax refund services the capital loan. Remaining amounts are repaid over time through project cash flows.
Returns are based on project revenue from the sale of alternative energy, less expenses. Distributions are made to partners in proportion to their interest.
All investors share the same risk profile, which may include regulatory changes, project performance and Section 12B amendments.
The interest must be disposed of based on the provisions of the trust deed or shareholders agreement. We suggest consulting your legal advisor if this situation arises.
In certain cases, withdrawal from the partnership is permitted but only after four (4) years. Transfer of investments are not permitted within the first four (4) years.