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There are tax consequences for corporate reorganisations. Know what you can do about them right here

by , 17 December 2015
A corporate reorganisation is the change you make to the structure of your company or business. And with it comes crucial tax consequences. So read on to learn more and find out what you can do about them...

What are these consequences?

The change that comes about as a result of corporate reorganisation can be because of a merger or because of a transfer of assets from one company in the group to the other (otherwise known as a group transaction).

Now when SARS decided to introduce Capital Gains Tax (CGT), it affected these transactions.

In other words, if you merge with a subsidiary and transfer your assets, you're liable for CGT, transfer duty as well as securities transfer tax on EACH transfer.

What can be done about them?

Thankfully, SARS relooked at some of these transactions and has since provided some tax relief.

These provisions help you postpone any taxes you would have paid now, on the disposal of an asset, to a later date.

Read on to find out how you can achieve this postponement…
 
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How can you achieve this?

You can do this by letting the original owner keep an individual interest in the asset. In other words, he's not getting rid of it completely.

Or, when you transfer the assets between companies, there's a continuation of the original business activity. Click here to learn more…

5 Transactions that qualify for tax relief:

1. The transfer of assets into a company in exchange for shares in the company (asset-for-shares transactions);

2. Mergers (amalgamation transactions);

3. Transfers of assets within a group of companies;

4. Unbundling transactions; and

5. Liquidations.
 
NOTE: Remember that SARS created anti-avoidance rules in order to stop you from abusing these tax concessions.

To learn more on corporate reorganisations, get hold of the Practical Tax Loose Leaf Service. 

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