Results 1 to 3 of 3

Thread: Shareholders interest Tax deductible?

  1. #1
    New Member
    Join Date
    Nov 2019
    Location
    Pretoria
    Posts
    1
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Shareholders interest Tax deductible?

    Hi All,

    A shareholder received about R17,000 interest income on his loan to his business. He is the majority shareholder.
    He declares this interest income on his tax return and receives the tax exemption on the interest received.
    I understand the company can deduct the interest because it is in the production of income. (The loan was used to buy equipment, etc.)
    But I stumbled upon section 23M of the Income Tax Act that prohibits interest from "controlling persons" persons as a deduction for the company if it was not subject to tax in the hands of the shareholder?

    So my question is: If the shareholder did not pay tax on the interest due to the exemption for individuals, can the company deduct the interest for tax purposes?

    Thank you for your help!

  2. #2
    Gold Member
    Join Date
    Feb 2016
    Location
    Johannesburg
    Posts
    713
    Thanks
    74
    Thanked 199 Times in 178 Posts
    Hi Loidf

    It was taxable, but less than the exempted amount, so the interest can be deducted by the company.

  3. #3
    Junior Member
    Join Date
    Jan 2020
    Location
    Cape Town
    Posts
    22
    Thanks
    5
    Thanked 4 Times in 4 Posts
    Quote Originally Posted by Andromeda View Post
    Hi Loidf

    It was taxable, but less than the exempted amount, so the interest can be deducted by the company.
    Agreed - the amount was taxed

Similar Threads

  1. Shareholders
    By Neilsp1 in forum General Business Forum
    Replies: 2
    Last Post: 12-Sep-17, 04:10 PM
  2. [Question] ANNUITY DEDUCTiBLE TAX BENEFIT ERROR????
    By Patsy in forum Tax Forum
    Replies: 3
    Last Post: 29-Jul-15, 02:05 PM
  3. Replies: 10
    Last Post: 15-Apr-15, 10:48 AM
  4. [Question] Home Office - What monthly Expenses are Legally deductible and how is it determined?
    By Constance in forum General Business Forum
    Replies: 3
    Last Post: 06-Oct-11, 10:34 AM
  5. Home security costs are not tax deductible.
    By Dave A in forum General Regulatory Compliance Forum
    Replies: 2
    Last Post: 19-Dec-07, 04:50 PM

Tags for this Thread

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •