In a binding private ruling published on 2 May 2017, SARS was requested to confirm the income tax, donations tax, capital gains tax and value-added tax consequences of the proposed waiver of a right to receive an annual quantity of produce in terms of a joint venture agreement.
Interestingly, the ruling confirmed that the debt waiver provisions contained in section 19 and paragraph 12A of the Eighth Schedule do not apply. The Interpretation Note on Debt Reduction issued by SARS does not specifically address a waiver of a contractual right but does contemplate that a debt is reduced if the contractual obligation attaching to the debt is discharged.
The facts of the published ruling are insufficient to be able to understand if there was a debt associated with the contractual right. However, it is noteworthy that the debt waiver provisions should be considered in circumstances where there is a waiver of a contractual right.