Q: Does an amalgamation of collective investment scheme carried on in
South Africa qualify for the CGT roll-over relief provided for in section 44 of
the income tax act?
A: A CIS in securities is not defined in s1 of the Income Tax Act
(No. 58 of 1962) ("ITA”) as a "company” (repealed in 2009 to allow trust like
taxation of investment flows), however, for the purposes of certain corporate
rules (s42 & s44 of ITA) it will be a company as it is specifically
included in the s41 definition of "company”. It should be noted that this
specific extension of the "company” personality also applies to the definition
of "connected person” (see proviso in the definition of "connected person” in
s1 ITA) should this also be a necessary consideration.
Therefore, for the purposes of paragraph (a) of the
definition of "amalgamation transaction” in s44 of the ITA, if both CIS’s are
residents and the existence of the amalgamated CIS will be terminated after the
disposal of the assets, then in general the relief as envisaged in s44 will
apply to the extent that all the other requirements are met for the relevant
Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.
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