A holding company will be acquiring all of the subsidiaries assets in terms of s47 transaction. The only liabilities owned by the subsidiary are due to the holding company. The liabilities did not arise as part of the liquidation distribution. In terms of s47(3A), it does not provide certain rules for when the liabilities are due to the holding company prior to the liquidation distribution. How will the debts owed to the holding company be settled by the subsidiary without it triggering s47(3A)?
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
We are careful not to be in a position to compete with our members. However, that said, if we restate your question, do you mean - • A holding company will be acquiring all of the subsidiaries assets in terms of s47 transaction. • The only liabilities owned by the subsidiary are due to the holding company. • The liabilities did not arise as part of the liquidation distribution. • The assets are sold to third parties and the proceeds are then be used to settle the debt to the holding company. • The remaining assets are then transferred to the Holding company. • In my view, section 47(3A) would not be triggered. Please confirm whether I am on the right track. We remain within our mandate if we guide based on your views.