Corporate Tax
Tax Considerations Disposing a Business and/or Shares
Duration: 2 hours
Price: R495.00
Title / Topic
Tax Considerations Disposing a Business and/or Shares
Presenters : Johan Heydenrych
Overview
This webinar will focus on the South African legislative environment where the business is a tax resident of South Africa. We will, however, also address scenarios where the seller and/or the buyer is a non-resident.
Whilst the webinar is not intended to be a comprehensive analysis of the law, it will serve as a valuable “tax-checklist” for any seller or buyer of a business.
Webinar content
The following important considerations will be discussed at the hand of practical examples:
- Selling a business vs selling shares or membership in a close corporation (CC).
- Sale of shareholder loan accounts.
- Important considerations for the seller of a business, including:
- How to prepare for and manage a due diligence.
- Tax implications arising from sale of shares/member’s interest in a CC.
- Tax implications of sale of assets:
- Fixed assets.
- Trade debtors (including doubtful debts).
- Goodwill.
- Prepayments.
- Tax implications from the transfer of liabilities to the buyer:
- Trade creditors and loan accounts.
- Contingent liabilities transferred, such as provisions for leave pay, bonuses, warranties etc. [We will discuss Interpretation Note 94 (IN 94) as well as the Ackermans case].
- Finance lease liabilities and IFRS 16 assets/liabilities.
- Income tax and VAT implications arising from transactional costs.
- Important considerations for the buyer of a business, including:
- Managing tax risks by performing a due diligence and obtaining tax warranties in the purchase agreement. Johan will provide practical examples of risks and opportunities identified in his 30 years’ experience in doing tax due diligences.
- What the automatic application of corporate relief procedures will mean for the purchaser of the business.
- How to manage contingent liabilities acquired as part of the acquisition of the business.
- Financing the purchase:
- Managing the deductibility of interest incurred on loans to acquire shares/business (Sections 23M, 23N, 24O).
- Tax implications of raising fees, commitment fees and guarantee fees.
- How to manage a disconnect between accounting and tax:
- Valuation rules with specific reference to IFRS 3.
- Effective date of the transaction.
- Important legislation will be highlighted including but not limited to the following:
- Capital gains tax:
- Time of disposal (Par 13 of the 8th Schedule to the Income Tax Act).
- Deemed value of disposals (Par 38 of the 8th Schedule).
- Clogged losses (Par 39 of the 8th Schedule).
- Disposal for unaccrued amounts (par 39A of the 8th Schedule).
- Par 43A deemed proceeds on extraordinary dividends received.
- Income tax:
- Corporate rules (S41 to S47 of the Income Tax Act).
- Section 8(4)(a) and 8(4)(k) recoupments.
- Section 11(o) sale of asset allowances.
- Interest deductibility rules (Sections 23M, 23N, 24O).
- Value-added tax
- Section 11(1)(e) – sale of going concern.
- Change in use adjustment and Section 18A.
- VAT incurred on transactional costs (raising fees, legal fees, etc.).
- VAT on imported services (S7(1)(c)).
- Capital gains tax:
- Basic principles if the seller or buyer of the business is a non-resident.
Who should attend?
Tax managers/consultants, heads of tax, financial directors, accountants.