56.    Disposal by creditor of debt owed by connected person

(1)     Where a creditor disposes of a debt owed by a debtor, who is a connected person in relation to that creditor, that creditor must disregard any capital loss determined in consequence of that disposal.

(2)     Despite paragraph 39, subparagraph (1) does not apply in respect of any capital loss determined in consequence of the disposal by a creditor of a debt owed by a debtor, to the extent that the amount of that debt so disposed of represents-

(a)       an amount-

(i)     which is applied to reduce the expenditure in respect of an asset of the debtor in terms of section 19(3) or paragraph 12A(3); or

(ii)     which must be taken into account by the debtor as a capital gain in terms of paragraph 12A(4);

[Item (a) substituted by section 119(1)(c) of Act 22 of 2012, amended by section 138(1)(a) of Act 31 of 2013 and substituted by section 63(1) of Act 34 of 2019 deemed effective on 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date]

 

(b)     an amount which the creditor proves must be or was included in the gross income of any acquirer of that debt;

 

(c)     an amount that must be or was included in the gross income or income of the debtor or taken into account in the determination of the balance of assessed loss of the debtor in terms of section 20(1)(a); or

 

(d)     a capital gain which the creditor proves must be or was included in the determination of the aggregate capital gain or aggregate capital loss of any acquirer of the debt.