SARS Clarifies Interest Deductibility on Loans Used to Redeem Preference Shares

The South African Revenue Service (SARS) has published Binding Private Ruling: BPR 424, which clarifies the deductibility of interest on loans used to redeem preference shares.The ruling considers whether interest on a post construction loan used to redeem preference shares is deductible under section 24J of the Income Tax Act. SARS confirms that the applicant may deduct interest on the new senior loan facility, but only to the extent that the borrowed funds are applied to redeem the prefere…