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South Africa Issues Tax Guide On Debt Relief

by Lorys Charalambous, Tax-News.com, Cyprus

04 August 2015


The South African Revenue Service (SARS) has issued a draft interpretation note that provides guidance on the income tax consequences when a debt, or a portion of a debt, is forgiven without "adequate" consideration.

South Africa overhauled its rules on the taxation of companies receiving debt relief in January 1, 2013, after it was considered that the tax burden on these companies was undermining the benefits of that relief.

The interpretation note seeks to provide enhanced guidance on the new uniform system. The rules are aimed at ensuring that a reduction of debt is not subject to more than one of the following taxes:

  • Estate duty
  • Donations tax;
  • Income tax on a fringe benefit received by an employee; or
  • Income tax on income

The guidance contains an in-depth explanation of how the "new regime" applies to connected entities in particular.

TAGS: individuals | capital gains tax (CGT) | inheritance tax | South Africa | compliance | tax | business | tax compliance | revenue guidance | corporation tax | tax authority | transfer pricing | individual income tax | Africa

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