Section 7C has been a hot topic for tax practitioners since its introduction in the Income Tax Act as part of the 2016 amendments. It is one of the few sections that most people recognise by the section number! SARS issued a draft interpretation note for comment late in November 2025. Although this document is only a draft, one can glean some insight into SARS’ approach and interpretation of the provision.

The draft interpretation note, amongst others, addresses:

(1) How the interest and deemed donation is calculated

(2) The focus of the section being on the lender

(3) What is means for a loan to be made at the instance of a person

(4) the application of the provision in the context of loans that arise when amounts are vested by trusts.

In episode 71 of my podcast, Tax Break, I discuss these aspects of section 7C that are addressed in this draft interpretation note. You can listen to the episode at the link below: