Companies And Special Corporate Rules

Question 1

S42 asset for share transactions

Answer 1

Definition: Person disposes of asset, mv > bc or more than inventory amount taken into account. To a resident company in exchange for shares. On close of day person holds a qualifying interest or is engaged full time by the company.
Acquiring company must hold asset as capital as inventory or a capital asset. If inventory acquired it must be held as inventory.

Disposal is at bc, bc is carried over to the shares. No recoupments. Company deemed acquired asset at bc.

If afterwards hold 25/35% of shares, rollover do not apply and shares deemed acquired at mv.
If company sells asset in 18 months, portion of gain may not be set off against losses.
If person cease to hold qualifying interest, deemed disposed of shares at mv on that date and reacquired.
If it is an allowance asset, company takes over tax history.

Ctc would be amount taken into account for trading stock, or bc of asset.

Question 2

S45 inter group transactions

Answer 2

Capital asset deemed disposed of at bc and receiving company take over at bc.
Trading stock acquired at cost included in income.
Allowances and recoupments transferred.

Question 3

S41 corporate rules. General

Answer 3

Allowance asset. Capital assets where allowance is allowed.
Special rules overrule 80A-80L and 103
When recoupment or cgt rolled over for replacement assets of these sections, and that asset is disposed of or distributed in terms of these sections, the recoupments and gains must be disregarded and the person acquiring the asset deemed one and the same person.