Investments in foreign operations often include shareholder loans denominated in foreign currencies. Telkom disposed of such a shareholder loan at a substantial loss. It applied a disposal rate to deduct this as an exchange loss against its taxable income. SARS disallowed the deduction on the basis that it represented a loss that was beyond the scope of section 24I, which deals with gains or losses on foreign exchange transactions. The Supreme Court of Appeal considered this dispute and provided valuable guidance on the interpretation of tax legislation in the process. This article provides a brief review of this aspect of the judgment in the Telkom case.