Kyk! GROOTplaas: Besoldigingsbevele, 1-Aug-19

The use of preference shares in financing or corporate structuring has become increasingly prevalent in recent years. Preference shares, being equity in nature, when used as a financing instrument, can take the form of a debt instrument, blurring the boundary between debt and equity. Accordingly, the South African government has proposed significant amendments to Section 8E of the Income Tax Act 58 of 1962 (“ITA”) in the form of the 2025 Draft Taxation Laws Amendment Bill (“Bill”) published for public comment on 16 August 2025. The proposed amendments aim to align the tax treatment of “hybrid equity instruments” such as preference shares with their true economic substance. As it stands, these changes will come into effect on 1 January 2026.