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Draft Interpretation Note: determining a 'group of companies' for purposes of the corporate rules

10 March 2013   (0 Comments)
Posted by: SAIT Technical
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By SARS Legal & Policy

The corporate rules contain, amongst other things, special provisions relating to the income tax consequences (including capital gains tax consequences) of transactions between companies forming part of a "group of companies”. Under qualifying circumstances, the corporate rules make it possible for companies in such a group of companies to transfer assets between each other without adverse tax consequences.

The Income Tax Act contains two definitions of a "group of companies”, namely, a general definition in section 1(1) which generally applies to the Act as a whole and a narrower definition in section 41(1) which applies to the corporate rules and a limited number of other provisions in the Act. The definition in section 41(1) excludes certain companies which might otherwise have qualified for relief under the corporate rules.

SARS recently issued a Draft Interpretation Note that provides guidance on the interaction of the definitions of a "group of companies” contained in sections 1(1) and 41(1).

Please click here to download the Note.


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