STACK ’EM HIGH

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW -

ap­plied to SARS for a rul­ing. First, in re­spect of se­cu­ri­ties trans­fer tax, the is­sue of shares is specif­i­cally ex­cluded from the def­i­ni­tion of “trans­fer” in s1 of the Se­cu­ri­ties Trans­fer Tax Act. Se­cond, there is no ques­tion of a waiver of the cap­i­tal or in­ter­est on the in­ter­com­pany loans as th­ese would be set­tled in cash.

Per­haps the tax­payer was look­ing for a rul­ing from SARS to the ef­fect that the scheme as a whole, that is, the sub­scrip­tion for shares with the set­tle­ment of the loans did not con­sti­tute im­per­mis­si­ble tax avoid­ance un­der the gen­eral anti-avoid­ance rules in part IIA of the In­come Tax Act. How­ever, SARS specif­i­cally in­cluded a note in the rul­ing stat­ing that it did not con­sider the ap­pli­ca­tion of the gen­eral anti-avoid­ance rules on the pro­posed trans­ac­tion.

Pic­ture: iSTOCK

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