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No tax relief for hedge funds?

South Africa

The business of a hedge fund has been declared to be a collective investment scheme 'CIS' in terms of the Collective Investment Schemes Control Act 'CISCA'. Taxand South Africa discusses further.

A person that conducts the business of a hedge fund must, within 6 months from 1 April 2015, lodge with the registrar of the Financial Services Board an application for registration as a manager to operate a hedge fund in accordance with section 42 of CISCA. 

Hedge funds may comply with the CISCA provisions in one of the following ways:

  • By transferring their assets to a registered portfolio of a new scheme established by an approved CISCA manager which scheme would constitute a CIS trust arrangement
  • By transferring their assets to a registered portfolio of a new scheme established by an approved CISCA manager which scheme would constitute an en commandite partnership
  • In the case of a  hedge fund that is currently constituted as an en commandite partnership by retaining such partnership and appointing an approved CISCA manager and registering the partnership as a new scheme

Discover more: No tax relief for hedge funds?


Your Taxand contact for further queries is:
Bernard Du Plessis
T. +27 21 410 2500
E. bduplessis@ENSafrica.com

Quality tax advice, globally

 

Taxand's Take

It seems that in practice most hedge funds that are currently constituted as partnerships will opt for a transfer of the assets to a Hedge Fund CIS. This makes it even more important that real tax relief is provided. 

Taxand's Take Author

Bernard Du Plessis
Taxand Board member
South Africa
Sub-Saharan Africa

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