Company A requires assistance with regards to a merger. The group is structured as follows: There are two trusts which own Company A. Company A is the holding company of 17 subsidiary companies. The group structure is horizontal. The holding company wan
Author: Peter Surtees
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
Section 45(4)(c) will keep the client out of the punitive clutches of section 45(4)(b). Nonetheless, I wonder why you default to section 45, which should have a big red warning sign against it in your copy of the Act. It’s the section that most tax practitioners use as a last resort; mainly because a lot can change in 7 years. I think Silke’s concern is perhaps over conservative; but I tend to recoil from section 45 unless nothing else will do; and anyway, who am I to argue with the learned authors of Silke? You have a simpler alternative to achieve the objective, namely section 47, transactions relating to liquidation, winding-up and registration. Pay up the property as a liquidation/deregistration dividend. No dividends tax payable; asset goes up at base cost and building allowances to date; holding company is treated as having held the assets at all times since the subsidiary acquired it; wind up the subsidiary.