SAIT’s submission on the draft interpretation note regarding “similar finance charges” under section 24J of the Income Tax Act argues that the current SARS interpretation may not align with the legislative intent or practical application of the provision. SAIT maintains that section 24J is primarily concerned with determining whether a financial instrument exists, and once that is established, all amounts payable under the instrument, including fees such as raising, structuring, and origination fees, should be included in the interest calculation using the yield-to-maturity method. Citing case law (IT 25042) and the 1995 Explanatory Memorandum, SAIT emphasizes that these charges are integral to the cost of borrowing and should not be treated separately. It concludes by recommending that SARS revise the draft to ensure consistency, clarity, and alignment with both legal precedent and the realities of financial transactions.
