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South Africa: Interest deductibility on loans used to redeem preference shares

South African Revenue Service addressed the tax treatment of interest on loans used to redeem preference shares

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march 6, 2026

The South African Revenue Service (SARS) in February 2026 published Binding Private Ruling No. 424, addressing the tax treatment of interest on loans used to redeem preference shares, to the extent that the loans are not used to pay accrued dividends on the preference shares.

The ruling clarifies that interest on a post‑construction loan used for such redemption may be deductible under section 24J of the Income Tax Act, subject to the statutory requirements being met.


For more information, contact a KPMG tax professional in South Africa:

Lesley Bosman | lesley.bosman@kpmg.co.za

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