Bruce Russell Grant Thornton. Unrealised exchange differences on foreign denominated debts between connected persons have been subject to an array of income tax treatments over the past few years. Realisation of the exchange difference is triggered to the extent that the related debts have been repaid, setoff or settled in any other manner.

Previous tax treatment of unrealised exchange differences.

For foreign denominated loans and advances between connected persons made in tax years after Novemberthe tax treatment of unrealised exchange differences is different:. Firstly, unrealised exchange differences on all loans and advances, including trade receivables and trade payables, are deferred for income tax purposes.

Secondly, only when exchange differences are realised are these amounts included in, or deducted from, taxable income. Because of these provisions, South African tax resident companies may have significant unrealised exchange gains or losses that have not yet been subject to income tax adjustments.

IAS 21 The Effects of Changes in Foreign Exchange Rates - IFRSbox

Further changes to the treatment of unrealised exchange differences. A new regime, introduced by section 24I 10Anow regulates the income tax treatment of unrealised exchange differences on loans between connected persons.

This new regime seeks to align the income tax and IFRS treatment of unrealised exchange differences, unless a good reason exists for these differing treatments. In other words, if any of these conditions do not apply, then the unrealised exchange differences must be included in or tax treatment of unrealised foreign exchange gains from taxable income.

Section 24I(10A) – unrealised exchange gains and losses on loans between connected persons - The SA Institute of Tax Professionals

Section 24I 10A of the Act is effective for years of assessment commencing on or after 1 January Consider the changes to the treatment of unrealised exchange differences between connected persons: Taxpayers are advised to consider the implications of unrealised exchange differences relating to loans between connected persons.

This article first appeared on gt. Topic TBC - 29 June.

Section A of the Tax Administration Act, as amended requires that all tax practitioners tax treatment of unrealised foreign exchange gains with a recognized controlling body before 1 July It is a criminal offense to not register with both a recognized controlling body and SARS. General Suspension and Termination of membership Complaint process How to lodge a complaint Downloads.

Honorary Tax Fellowships David Meyorowitz Aubrey Silke Duncan Bentley Micheal Katz Dennis Davis. Criteria Overview Entry Annual How much money can a lpn earn guide.

Individual Benefits Corporate Benefits Professional Indemnity. All CPD Events CPD Subscription Tax Conferences Tax Faculty Futures trading information and spot price volatility Recordings: Members Only CPD Articles: Members Only CPD Terms and Conditions What is Tax CPD? CPD Requirements CPD Guide How to obtain CPD hours with SAIT How to log CPD hours SAIT accredited CPD providers.

Capital gains tax - Wikipedia

Tax Professional Tax Technician. Tax Student Website Student Conferences. Email to a Friend. WHY REGISTER WITH SAIT? Tax update for payroll administrators - Pretoria SAIT CPD Satisfaction Survey: Tax update for payroll administrators - Bloemfontein SAIT: H1 H2 H3 H4 H5 H6.

Section 24I(10A) – unrealised exchange gains and losses on loans between connected persons - The SA Institute of Tax Professionals

Membership Management Software Powered by YourMembership:: Yes No, Keep Private. For foreign denominated loans and advances between connected persons made in tax years after Novemberthe tax treatment of unrealised exchange differences is different: Further changes to the treatment of unrealised exchange differences A new regime, introduced by section 24I 10Anow regulates the income tax treatment of unrealised exchange differences on loans between connected persons.

The loan or advance is not a current asset or a current liability under IFRS; The loan is not funded directly, or indirectly, by persons forming part of the same group of companies as the debtor or creditor; The loan is not funded directly, or indirectly, by persons who are connected persons in relation to the debtor or creditor; and No forward exchange contract or a foreign currency option contract has been entered into to hedge against exchange differences arising on the loan.

Is there an unrealised exchange gain that should be included when determining provisional tax to be paid? In preparing financial statements, are there any unrealised exchange gains or losses that must no longer be recognised in deferred tax?