For every asset you purchase, you are assigned an asset number so that all asset ownership can be tracked. For the solar panels and hives, this means a serial number. For blueberry bushes, you will assigned a blueberry bush on a farm. Remember, you own the asset, not the land. The land is owned by the farmer or a landlord.
How tax incentives work
Depending on which asset you buy, as investors own the individual assets for income generation, the income generated will be subject to taxation as part of your income tax. There are a number of tax benefits you can apply for. The solar panels qualify for a Section 12 benefit because it is a green initiative. This allows for the full purchase amount to be written off in the first year of assessment. Both beehives and blueberry bushes qualify under Section 11 for assets used for the production of income and the purchase price is written off against income over the first five years. All tax benefits are ultimately at the discretion of SARS. You will receive a letter and a tax pack at the start of the individual tax season on 01 June each year. Attached is our tax pack guide from 2018 as an example.
You can also contact Bizzacc (www.bizzacc.co.za) for a clearer picture about the implications on your taxable income.
Does Impact Farming qualify as a Section 12J company?
Fedgroup's Impact Farming is not a Section 12J company and you would not qualify for the tax breaks associated with this tax directive.