A taxpayer sold his business activity and assets from his private company, during the year. The private company was not sold, only the goodwill/trade name/clients and certain fixed assets were sold to a new private company. Will the gain with regards to t
Author: Peter Surtees
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
The goodwill, trade name and client list are capital assets and will attract CGT on disposal by the company. As you correctly state, the company will be taxed on 80% of the gain. As for the fixed assets, if these were allowance assets the company will be subject to normal tax on any recoupments of previously claimed deductions under section 11(e) or the capital allowances under the Income Tax Act. Any gain above these recoupments will be capital in nature and also subject to CGT in the hands of the company.