Ring-fenced loss
Also known as: ring-fencing, assessed loss ring-fencing
A rule that confines certain losses so they can only offset income or gains of the same kind, rather than reducing your other income.
Definition
Ring-fencing limits how a loss can be used. In South Africa, section 20A can ring-fence assessed losses from certain trades carried on by higher-income individuals, so those losses offset only future income from the same trade. Separately, capital losses can offset only capital gains, not revenue income. For crypto, this means a capital loss cannot reduce salary income, and certain trading losses may be ring-fenced.
Example
You make a R30,000 capital loss on crypto. It can be set off against other capital gains, but it cannot reduce your salary or other revenue income.
Jurisdiction notes
- South Africa: Capital losses offset only capital gains; section 20A can ring-fence certain trade losses of higher-income individuals.