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Consult Eridanus to invest in farming without own farm

This post is also available in: Afrikaans

So many town and city dwellers yearn to be a farmer but practical obstacles prevent them from making their wish come true. Embarking on a farming enterprise demands loads of capital and it normally takes a few years for the start-up farmer to suffer hardship first before her/his farm shows a profit worth mentioning.

Apart from the need of expensive land, the beginner farmer has to invest in a wide range of very expensive and technologically advanced farm implements and equipment, accompanied by the initial input costs of the first year’s crop or farming livestock.

However, there is a solution for people who want to experience that ‘farmer’ feeling without having to till a single acre, plant a single seed, or lose a single lamb because of vermin. The answer is SARS-approved Eridanus VCC, registered in terms of Section 12J of the Income Tax Act 58 of 1982, which allows a person to invest in farming without physically owning a farm.

For investors to qualify for tax relief, a paid-up investment has to be made before or on 28 February 2021. The minimum investment is R100 000, which entitles every investor to one share in Eridanus VCC. Investors receive one issued share certificate for every R100 000. Private investors are limited R2 500 000 per financial year and legal entities to R5 000 000 per financial year.

Private persons can qualify for tax relief to a maximum of 45% per financial year and legal entities to a maximum of 40% per financial year. To obtain the maximum tax relief the investment has to be kept up for a minimum of 5 years. Eridanus VCC expects dividends to be declared and paid twice per year. In the past financial year investors earned an average of 13% on their invested capital in dividend form.

Cobus Nel, CA (SA), chief investment officer of Eridanus VCC, anticipates that the average dividend (although it cannot be guaranteed) over the coming 5 years will not fall below the 10%-level. Furthermore the dividends received by the shareholders are not taxable in their hands should they be South African citizens.

Should an investor wish to withdraw her/his capital before or after the expiry of the 5-year period, she/he will be allowed to do so provided that that she/he had given notice three months’ written notice. In such an instance there will then also be consequences regarding the tax that have to be paid. It is advisable to contact Eridanus VCC in this regard (contact information given at the end of this article).

“Eridanus VCC invests the capital of investors, in terms of the advice by their investment committee, in farming entities producing maize under irrigation and in commercial and speculative cattle farming enterprises,” says Cobus.

“All cattle included in the project, are insured against theft and death, while the maize plantings are insured against hail, fire and rioting. The aim of Eridanus VCC is to ensure the maximum advantage for all involved parties. Investors receive a legally vested tax advantage and above average growth rate on their investment, while farmers can produce optimally and add value to the food security of South Africa.”

“Our long-term aim is to provide participating farmers alleviation by investing in their farming undertakings, while we also become involved in the farming activities to ensure optimal production by making knowledge, capital and strict financial management available. This will also lead to big savings in comparison with expensive financing presently available in the banking environment,” says Cobus.

“The investment advisory committee of Eridanus VCC is consequently investigating the possibility of new projects on an ongoing basis to enable an all-inclusive investment and advisory service to farming enterprises in which investments are made.”

“In the coming decades Eridanus will cement relations with their investors and investment entities in order to ensure robust relations in future and to foster opportunities that will contribute to the maximum advantage of all involved parties.”

To take advantage of the opportunities offered to investors and farmers by Eridanus, contact can be made at info@eridanus.co.za or by a telephone call to 011-888-8604, 082-926-5366, 084-660-9830 or 082-553-3306. You can also visit the website www.eridanus.co.za. *Terms and conditions apply.

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