To the extent that a contract is cancelled, it is expected that the parties to the contract will be restored to the position they were in prior to the entering into of the contract.
However, in terms of current provisions the cancellation of the contract results in a change in the base cost of the asset that was disposed of by the seller to the purchaser. In fact, the wording of the current legislation is that the base cost would reduce to zero, especially in the context of connected persons. This anomaly will be removed so that the original base cost is retained by the seller pursuant to a cancellation of a contract.
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This article first appeared on cliffedekkerhofmeyr.com.
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.