The 2024 Taxation Laws Amendment Bill, introduced in South Africa’s Parliament, on 30 October 2024, by allowing them to carry forward foreign exchange losses. This change addresses an existing imbalance in the taxation of foreign exchange gains and losses under section 24I of the Income Tax Act.
Currently, non-trading companies are taxed on all foreign exchange gains but cannot utilise foreign exchange losses in subsequent tax years.
The proposed amendment introduces a new section, 24I(3A), which requires non-trading companies to calculate their total foreign exchange gains and losses from foreign currency option contracts (FCOCs). If a company’s foreign exchange gains exceed its losses, the net excess will be treated as income, subject to certain deferral rules. If losses are greater than gains, the excess will be considered an exchange loss for the following year, allowing it to be included in future assessments.
The new rules are set to take effect on 1 January 2025, applying to assessment years beginning on that date.
