n Business Tax and Company Law Quarterly - Amalgamation transactions unpacked

Volume 5, Issue 3
  • ISSN : 2219-1585


Section 44 of the Income Tax Act governs one of the six so-called corporate roll-over relief provisions. The section provides relief for South African tax resident companies seeking to merge with each other whereby businesses are transferred to the merged entity. The article examines the consequences of an amalgamation, merger or conversion of South African tax resident entities and unpacks the eligibility for qualification. The disposal of assets by an 'amalgamated company' to a 'resultant company' and the applicable tax relief afforded to both parties is discussed. The section requires consideration in the form of equity and debt for the acquisition of assets from the amalgamated company. The term 'debt' is not defined in the section, which causes complexity where going-concern businesses are transferred with the assumption of contingent liabilities. The article also deals with the tax position of the shareholders of amalgamated companies who are required to exchange their shares for shares in the resultant company.

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