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New Income Tax Act amendment closes foreign trust low-interest interest-free loan

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New Income Tax Act amendment closes foreign trust low-interest interest-free loan

Mariska Delport, Associate in the Tax & Exchange Control practice, joined Michael Avery on Fine Music Radio to discuss the recent changes to section 7C of the Income Tax Act affecting cross border loans between South African taxpayers and trusts.

14 Mar 2025 09:49 Miutes Radio interview
New Income Tax Act amendment closes foreign trust low-interest interest-free loan

New Income Tax Act amendment closes foreign trust low-interest interest-free loan

Podcast

New Income Tax Act amendment closes foreign trust low-interest interest-free loan

Podcast

00:00 00:00
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Mariska explains that a key focus of the Income Tax Act is to protect South Africa’s tax base by preventing impermissible tax avoidance. Previously, low or interest-free loans to connected foreign trusts could escape donations tax under Section 7C if they fell under Section 31’s transfer pricing rules. The amendment closes this gap, ensuring any interest shortfall is treated as a deemed donation, now subject to donations tax.

Mariska explains how these changes impact taxpayers and estate planning strategies.

Click here to listen to the interview.

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