When will transfer duty be levied on the sale of a member’s interest in a close corporation?
12 May 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: I have a
client who’s about to sell his member’s interest in his Close Corporation. The
only asset in the CC is a property being used for commercial purposes although
there isn't any business rights on the property.
Besides CGT, what other taxes would apply to this
I am unsure if there will be transfer duty payable on the
transfer of the members interest in the CC.
A: Transfer duty
is payable on the sale of shares of a residential property company as defined
in the Transfer Duty Act, the former being a company holding residential
property as defined in s1. Residential property includes any dwelling or
unimproved land zoned for residential use.
Therefore if it is a residential property which is bought
for commercial purposes but have not been rezoned for commercial use the shares
will in our view fall within the definition and be subject to transfer duty.
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.