n Business Tax and Company Law Quarterly - Asset-for-share and amalgamation roll-over relief provisions - a comparison

Volume 6, Issue 1
  • ISSN : 2219-1585


Section 42 of the Income Tax Act governs one of the six so-called corporate roll-over relief provisions. The article examines the salient requirements of the section but primarily seeks to analyse the comparisons between the provisions of section 42 and 44 of the Income Tax Act. The section provides tax relief for companies, trusts and natural persons seeking to dispose of assets for the issue of 'equity shares' or the assumption of prescribed debt. The article examines the tax relief for assets disposed of for the seller and as well as the tax base of the assets acquired by the purchaser. Qualifying criteria for the section's eligibility includes at least a 10% equity interest in private companies or full time employment in the company in which the shares are acquired. The assumption by the purchaser of the seller's liabilities in particular instances creates a negative consequence for the seller upon the future disposal of the equity shares whereby the value of the liabilities assumed are included in the proceeds upon their disposal.

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