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The application of para 57 of the 8th Schedule on the sale of a CC’s assets plus goodwill

09 March 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: A close corporation sold assets and goodwill to the purchaser. The members of the close corporation have retired subsequent to the sale. The question is, does paragraph 57 of the Eighth schedule apply where close corporation can disregard up to R 1 800 000 of capital gain or do the members qualify for the R 1 800 000 "rebate".

A: Provided that the requirements of para 57(2) have been met, does one then have to consider whether the asset disposed of would qualify as an "active business asset”.

The term "asset” is defined in Part 1 of the 8th Schedule and includes property of whatever nature, whether moveable or immovable, corporeal or incorporeal but excluding any currency (excludes coins made mainly from gold or platinum), and a right or interest of whatever nature to or in such property.


It is my understanding that the goodwill being sold would fall within the definition of "active business asset” and your client may therefore well qualify for relief in terms of para 57 as the asset (goodwill) was used or held wholly and exclusively for business purposes.

I think that you have to familiarise yourself with para 57 to ensure that all other requirements have been met.

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.


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