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n Business Tax and Company Law Quarterly - The companies act and its impact on the income tax act

Volume 1, Issue 2
  • ISSN : 2219-1585

Abstract

The Companies Act 71 of 2008, upon becoming effective, will present challenging income tax issues for taxpayers. In addition, the recent draft Taxation Laws Amendment Bill, 2010 seeks to cater for some of the changes to the Companies Act. This article scans the Companies Act and highlights some of the key tax issues that will require consideration as a result of specific changes to the Companies Act as well as variations of shareholder rights that may be necessitated by the advent of the Companies Act. The article also examines relevant proposed tax amendments as they relate to the Companies Act. The article examines the tax consequences of the variation of rights in relation to shareholders, particularly from a Capital Gains Tax (CGT) perspective, and includes a discussion on whether a change in voting rights could result in a CGT disposal. The concept of 'adequate consideration' for the issue of shares is discussed,as well as how this will impact shares issued to employees, and the quantification of employees' employment gains.The formalities around share buy-backs for company-law purposes appear to have been reduced. The tax consequence thereof in terms of the timing of the recognition of Secondary Tax on Companies may vary.

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/content/btclq/1/2/EJC174676
2010-06-01
2019-08-22

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