A client sold their company to an independent third party the sales contract was subject to suspensive conditions and the effective date was defined in the contract as the 1 March 2016. The client is of the opinion that the sale took place on the 29th of
Important:
This answer is based on tax law for the tax year ending 28 February 2017.
Answer:
You have not provided us with enough information to provide guidance here. You state that effective date was determined in the contract as 1 March 2016 and also refer to paragraph 13 – i.e. that the time of disposal of an agreement subject to a suspensive condition is the date on which the condition is satisfied.
We don’t know if the terms relating to the effective date constitute a suspensive condition. It may well not be one. Judge Wallis, in a recent case (CSARS v Bosch), said:
“A suspensive condition is one that suspends the exigible content of a contract, either in whole or in part, pending the occurrence of an uncertain future event.”
We agree with you that the parties bear the onus to prove the date of disposal particularly where the inclusion rate changed the day before the effective date.