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4 tips to reorganise your business in minimising your capital gains tax

by , 06 November 2015
In light of Nene's Medium Term Budget Policy Statement, in which a 'Wealth Tax' was spoken about, many would throw their hands up in agreement when claiming that 'wealth tax' already takes form within Capital Gains Tax.

If you sell or dispose of assets, you can't escape from Capital Gains Tax (CGT) and non-compliance can result in hefty fines and strict penalties.

But what if you didn't always have to pay Capital Gains Tax on assets you got rid of?

Even though it won't provide immediate gain for you, you can escape the capital gain tax net by moving assets around.

Here are 4 tips to reorganise your business and minimise capital gains tax:

Tip#1: Company Formations (Section 42 of the Income Tax Act)

If you carry out business as a sole proprietor, and you want to set up a company, then you can transfer your assets to the corporate entity without gaining any capital gains tax.
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Tip#2: Share swaps (Section 43 of the Income Tax Act)

This is done if you want to introduce a holding company.

Tip#3: Intra group transaction (Section 45 of the Income Tax Act).

This happens when you dispose of an asset to another company but both companies form part of the same group at the end of the day the transaction takes place.

Tip#4: Amalgamations (Section 44 of the Income Tax Act)

This happens when your company, an amalgamated company, gets rid of all its assets to another company, a resultant company, through an amalgamation, merger or conversion. And, as a result, your company ceases to exist.
 
*To learn more on each of these tips, subscribe to the Practical Tax Loose Leaf Service today.

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