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The deferring of unrealised FOREX gains and losses where a debt is a non-current liability

Thursday, 15 January 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: I have a client that has a local company who has received a loan from its offshore holding company. The local company has an unrealised forex loss of some R21m as a result of this loan. The loan is disclosed as a non-current liability.

Accordingly we do have to reverse the forex loss as the loan is a long term liability. If it were a current liability then we would make no adjustment and they would get the deduction for the forex loss? Please can you confirm whether I have the correct understanding of the revised S24I(10A) provisions.

A: You are correct that section 24I(10A) does defer the unrealised forex gains/losses on the debt where it is a non-current liability for IFRS purposes and conforms to the other requirements (s24I(10A)(a)(ii) & (iii)). Therefore no tax deduction or inclusion will be provided for at year end until the year of assessment in which it realises. 

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.



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