Print Page   |   Report Abuse
News & Press: Technical & tax law questions

Can an assessed loss of a ‘purchased’ company be transferred to the ‘acquiring’ company?

02 March 2015   (0 Comments)
Posted by: Author: SAIT Technical
Share |

Author: SAIT Technical

Q: Company A buys Company B. Company B has a huge assessed loss. The intention of the acquisition is to get Company B’s employees and assets and then deregister Company B. Can Company A transfer the assessed losses available from Company B?

A: Section 20 of the Income Tax Act only allows the set-off of the loss from one trade to another for the same taxpayer. An assessed loss or balance of assessed loss therefore cannot be transferred from Company B to Company A and the amounts not utilised from the disposal of the assets will be forfeited on liquidation or prolonged deregistration (i.e. 1 year of assessment or more).

Disclaimer: 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.


WHY REGISTER WITH SAIT?

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.

MINIMUM REQUIREMENTS TO REGISTER

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.

Membership Management Software Powered by YourMembership.com®  ::  Legal