Synopsis

A monthly journal, published by PwC South Africa, that gives informed commentary on current developments in the tax arena, both locally and internationally.

Through analysis of and comment on new laws and judicial decisions of interest, Synopsis helps executives to identify developments and trends in tax law and revenue practice that may affect their business.

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In this edition:

Synopsis Tax today - March 2025

Section 23M underwent significant amendments during the 2021 legislative cycle as part of measures to broaden the corporate income tax base. These amendments came into effect for years of assessment ending 31 March 2023. Since then, taxpayers have had to grapple with a number of anomalies in the wording of these amendments. This has resulted in several so-called “clarificatory” amendments to the section, the first batch of which was seen during the 2023 legislative cycle. Most recently, in the 2025 Budget Review Government announced proposals for three further amendments to section 23M under the heading “Clarifying the interest limitation rules”. These are refining and clarifying the definition of “interest” to enhance certainty, reviewing the carve-out for the interest limitation rules and clarifying the treatment of foreign exchange (“forex”) differences when there is no accrual for the creditor. Our first article unpacks the proposal to amend the treatment of forex differences when there is no accrual for the creditor.

In a recent Tax Court judgment, further complexities of section 24J were brought to light, particularly in scenarios where financing arrangements involve the payment of fees to an entity other than the lender. Our second article delves into the uncertainties that arise when determining whether such arrangements give rise to one or two ‘instruments’ for the purposes of section 24J, and the implications thereof for the deductibility of fees in the hands of the borrower. By examining the facts of the Taxpayer Trust vs CSARS case, we explore the potential for contractual ‘sameness’ and its impact on the application of section 24J in these circumstances.