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IN 75 - Exclusion of Certain Companies and Shares From "group of companies"

25 October 2013   (0 Comments)
Posted by: Author: SARS Legal and Policy
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Author: SARS Legal and Policy

This Note provides guidance on the application of the proviso to the definition in section 41(1). 

Under certain circumstances the corporate rules provide relief from income tax when assets are disposed of between companies forming part of the same "group of companies” as defined in section 41(1). Generally these relief measures defer the income tax on income and capital gains until the asset is disposed of to a third party or until a degrouping occurs. 

The Act contains two definitions of a "group of companies”, namely, a wider definition in section 1(1) and a narrower definition in section 41(1). The narrower definition generally applies for the purposes of the corporate rules but is also used elsewhere in the Act. 

The definition in section 41(1) starts with the definition in section 1(1) and then proceeds to exclude certain companies and shares by way of a proviso. 

This Note is concerned with the application and effect of that proviso. 

To view the Interpretation note please click here:


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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