Share with your friends

South Africa: Changes to debt relief provisions

South Africa: Debt relief provisions

Section 19 and paragraph 12A of the Income Tax Act contain rules with tax implications for debtors whose debts are reduced or eliminated for less than the face value of the debt.


Related content

The Taxation Laws Amendment Bill contains amendments that would take effect retroactively from 1 January 2018 (when the 2017 changes became effective) to provide that the 2017 amendments do not negatively affect taxpayers.

The bill also introduced two changes that would become effective for years of assessment beginning on or after 1 January 2019.

Effective retroactively, 1 January 2018

Depending on how the proceeds of a debt were used or the how the debt arose, the provisions could trigger income tax recoupments, a reduction in the tax cost of assets, or both. Subject to exclusions, the debt relief provisions would be triggered when there is a “concession or compromise” in relation to a debt that results in the presence of a “debt benefit.”


Read an October 2018 report [PDF 140 KB] prepared by the KPMG member firm in South Africa

Effective 1 January 2019

  • Tightening of exclusion in relation to donations—the exclusion would only apply when the donation or deemed donation results in a donations tax liability.
  • Recoupments and capital gains on assets disposed of—to the extent that the debt benefit exceeds certain such allowances, the tax cost on which future allowances can be claimed would be reduced. 


Read an October 2018 report [PDF 131 KB] prepared by the KPMG member firm in South Africa

© 2020 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. For more detail about our structure please visit

Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal