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South Africa: Extended scope of anti-avoidance provisions to trusts, companies

South Africa: Scope of anti-avoidance provisions

The South African Revenue Service (SARS) is seeking to expand the scope of the rules that trigger the anti-avoidance provisions of section 7C under the income tax law, by linking certain transactions of individuals, trusts, and companies.


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Section 7C provides an anti-avoidance provision. Low interest or interest-free loan funding provided to a company that has no connected-person relationship to a trust, falls within the ambit of section 7C simply because the lender is connected to the trust. In an attempt to avoid triggering section 7C, some trusts have restructured assets and funding structures by pushing down the assets and low interest or interest-free loan funding to companies owned by the trusts. A change has been proposed to address such structuring.


Read a December 2017 report [PDF 106 KB] prepared by the KPMG member firm in South Africa

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