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What is the tax treatment of goodwill?

17 June 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Is the sale of goodwill subject to CGT?

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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