Mining Companies And Section 23K

Prior to the introduction of section 23K by way of clause 49 of the Taxation Laws Amendment Bill, Bill 19 of 2011 (the "TLAB") whether or not a taxpayer was permitted a deduction in respect of interest expenditure, hinged upon whether or not the expenditure satisfied the requirements in terms of section 11(a), read together with section 23 of the Income Tax Act No. 58 of 1962 (the "Act").

The introduction of section 23K, however, has introduced further requirements that must be satisfied in order for interest expenditure to qualify for a deduction in terms of section 11(a) of the Act and applies only in the context of section 45 (intra-group) and section 47 (liquidation distribution) transactions.