BPR 122: transfer of a business of a company as going concern to its holding company
17 October 2012
Posted by: SAIT Technical
By SARS Legal & Policy
BPR 122 was recently issued by SARS.
This ruling deals with whether –
• the transfer of a business of a company as a going concern to its holding company as a result of an amalgamation or merger will constitute an "intra-group transaction" as defined in section 45(1) of the Act;
• the dissolution of the amalgamating company will be governed by section 45(4)(c) of the Act;
• the cancellation of the amalgamating company's shares as a result of the amalgamation will – o constitute a disposal "between connected persons not at arm's length price" as provided for under paragraph 38 of the Eighth Schedule to the Act; and
o result in the imposition of securities transfer tax (STT) under section 2 of the STT Act;
• the transfer of a business of a company as a going concern to its holding company as a result of an amalgamation transaction will be governed by the provisions of section 47 of the Act;
• dividends tax will be payable in respect of the dividend in specie that will be declared and distributed by the amalgamating company as a result of the amalgamation;
• the holding company will be entitled to deduct the contingent liabilities taken over from the amalgamating company, as and when the liabilities are actually incurred by the holding company under section 11(a) read with section 23(g) of the Act.
Click here to download BPR 122.