NEW RULES AND EXEMPTIONS REGULATING HYBRID DEBT INSTRUMENTS

Monday, December 02, 2013
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The Taxation Laws Amendment Bill (Bill No. 39 of 2013) contains proposed amendments which will affect debt instruments that have equity features, namely hybrid debt instruments. The consequences of these instruments are currently dealt with in section 8F but there has been recognition that because of the three year period that is central to its application, the section has been ineffective as an anti-avoidance measure. The proposals in the Bill are intended to provide a stronger anti-avoidance measure. The proposed amendments were initially intended to come into effect on 1 January 2014 but the date has now been moved to 1 April 2014.The reason provided for this is to give companies time to restructure. It remains to be seen whether this period will be sufficient to allow for any restructuring to take place.

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