Can the entity acquiring this goodwill write it off for
income tax purposes?
A: The sale of
goodwill is the disposal of an asset (see paragraph 4.1.2 of the SARS CGT
guide) and a capital gain will result in most instances.
The cost of goodwill acquired will normally be capital in
nature and no deduction is therefore permitted under section 11(a). There is also no specific section that
provides for the deduction of the cost of goodwill.
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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