n South African Law Journal - Tax implications of the sale of a business

Volume 124, Issue 3
  • ISSN : 0258-2503


From a tax perspective, it is especially important to pay attention to the way in which the sale of a business is . This article explores the tax implications of various arrangements that may be entered into when a business is sold. It argues that the business should not be sold for a global sum, but instead a specific value must be attached to each component. The taxes payable when immovable property is sold as part of a business are outlined. The taxation of any recoupment of expenses claimed against an asset by the seller of fixed assets is also discussed, as are the tax positions of the buyer and the seller respectively regarding the sale of trading stock. Attention is also paid to the situation where a buyer takes over outstanding book debts and some of the debts cannot be collected during the course of the next year of assessment. The contribution also deals with the difficulties associated with taking over liabilities, such as delivery of previously ordered goods, fulfilling warranties, and payment of employees' leave and bonuses. Lastly, it is shown that where a business is sold, rather than shares in a company or an interest in a close corporation, an assessed loss of the seller cannot be used by the buyer.

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