The Taxation Laws Amendment Act, 31 of 2013 (the
"TLAA") introduced with effect from 1
April 2014, a new section 8F into the Income Tax Act, 58 of 1962
(the "Act") in order to reduce the
opportunity for the creation of equity instruments that are
artificially disguised as debt instruments ("hybrid
debt instruments").
In terms of the provisions of section 8F(1)(a) a "hybrid
debt instrument" is defined as inter alia any
instrument in respect of which a company owes an amount during a
year of assessment if the company is entitled to convert or
exchange that amount (or any part thereof) for shares in that
company or in any other company that forms part of the same group
of companies as that company. However, as an exception to the
provisions of section 8F(1)(a) of the Act, the TLAA inserted the
following words:
