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Debt reduction : indicative factors in classification as a donation for income tax purposes

dc.contributor.authorNel, Rudieen_ZA
dc.contributor.authorHerron, Andreaen_ZA
dc.date.accessioned2018-01-17T10:09:45Z
dc.date.available2018-01-17T10:09:45Z
dc.date.issued2016
dc.identifier.citationNel, R. & Herron, A. 2016. Debt reduction : indicative factors in classification as a donation for income tax purposes. Journal of Economic and Financial Sciences, 9(2):a56.
dc.identifier.issn2312-2803 (online)
dc.identifier.issn1995-7076 (print)
dc.identifier.urihttp://hdl.handle.net/10019.1/103040
dc.descriptionCITATION: Nel, R. & Herron, A. 2016. Debt reduction : indicative factors in classification as a donation for income tax purposes. Journal of Economic and Financial Sciences, 9(2):a56.
dc.descriptionThe original publication is available at https://jefjournal.org.za
dc.description.abstractDebt reduction in business is recognised for the economic relief afforded to the debtor involved. The new debt reduction regime was introduced in the Income Tax Act (section 19 and paragraph 12A of the Eighth Schedule) with the aim of minimising the tax impact so as not to negate the economic benefit. The new regime introduced an exclusion for debt reduced by way of a donation and uncertainty exists on instances where this exclusion would apply. This article considered four broad categories of factors indicative in the classification of a debt reduction as a donation (inadequate consideration; gratuitous waiver; intent and motive; classification as connected persons) and concluded with the formulation of such factors. The classification as connected persons is regarded as the most indicative of a debt reduction being classified as a donation, which could result in tax arbitrage if the creditor and debtor are taxed at different rates on the taxable income result of the debt reduction.en_ZA
dc.description.urihttps://jefjournal.org.za/index.php/jef/article/view/56
dc.format.extent12 pages
dc.language.isoen_ZAen_ZA
dc.publisherAOSIS Publishing
dc.subjectDebten_ZA
dc.subjectDebt reliefen_ZA
dc.subjectIncome taxen_ZA
dc.titleDebt reduction : indicative factors in classification as a donation for income tax purposesen_ZA
dc.typeArticleen_ZA
dc.description.versionPublisher's version
dc.rights.holderAuthors retain copyright


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