The other aspect of the example is that the shares issued to the seller are the market value of the property R160 and not R100. Please note, however, that article 42, paragraph 5, of the Act contains a provision to combat the infidel. With respect to this section, a person who sells more than 50% of the assets transferred in an asset transaction for sharing within 18 months of the date of acquisition is taxed on the income statement and not on the capital. To the extent that the transaction complies with the legal provisions and requirements of the ITA, the transfer and disposal of the assets is not subject to a capital gains tax obligation (in respect of capital assets) or a normal income tax (in the case of trading shares). It is a consequence of an asset transaction to share that the acquired asset retains its nature. In other words, if the transferred asset was held by the seller as a capital asset, the buyer will also hold it as capital, and the same applies to the stock of trading objects. The ensuing operation is the most delicate: company R immediately transfers its shares in company A to company Q, in exchange for shares of Q. Company R, these shares are transferred as part of an asset transaction for sharing, in accordance with article 42 of the law. Company R will then hold 75% of the shares of Company Q.

The remaining shares of Company Q are held by X. The transaction is considered an asset transaction for sharing, provided that the property is a capital value in the hands of the applicant and that there is no change of intent leading to a transfer for capital gains tax purposes. It is particularly important to decide that the basic cost of the property or its market value at the valuation date must be considered by the applicant as an amount that must be taken into consideration by the recruiter within the meaning of § 11 (a), 22 (1) or 22 (2), all of which deal with stock trading. If the co-arrival disposes of the property within 18 months of the transaction, an amount received in respect of the trading shares must be deducted from all assessed losses or balances of the assessed losses. In certain circumstances, the Income Tax Act allows for relief from rollovers when assets are introduced into a company in exchange for shares in that company. Binding Private Ruling 287 is a good example of the need to thoroughly review the provisions of this bearing rescue measure before they can be concluded that they apply to a transaction. However, there are certain legal requirements for a transaction to be considered a transfer of assets by sharing. These requirements include the transfer of an asset from a person to a company established in South Africa; that the asset is to be transferred at a basic cost where there is a capital value or a tax cost when trading shares, and the asset is to be exchanged for equity shares in the acquiring company. Company A is a local company. The shares of Company A (i) are 89.8% held by Company B, a foreign company, and (ii) 10.2% by the Chief Executive Officer (MD) of Company A. Section 42 of the Income Tax Act 1962 (Act) defines this exchange as an asset transaction for sharing.

In other words, the seller sells an asset to a company for the issuance of new shares (shares) by that company if the value of those shares corresponds to the value of the property acquired. One of the provisions contained in the corporate rules is the famous “Asset for Share” operation within the meaning of Section 42 of the ITA. . . .