Are you thinking of transferring your assets to a company but concerned about the transfer costs and tax implications? An Asset for Shares transaction/agreement might just be what you are looking for…
What is an asset for shares transaction?
By Tamaryn Campbell (Attorney|Conveyancer|Notary)
Section 42 of the Income Tax Act, No 58 of 1962 (Act) allows taxpayers transfer assets to a company free of immediate tax consequences, provided certain requirements are met; there is a “roll-over” for tax purposes.
It is essentially a transaction in terms of which person (the Transferor) disposes of an asset to a company (the Company) in exchange for the issue of shares by the Company, provided the Transferor holds a qualifying interest in Company at the end of the day of the transaction. Such a qualifying interest in the company must be retained for a minimum period of 18 months after transfer.
What does this all mean?
What this means is that, should you wish to transfer your assets to a new/existing company but you are concerned about the cost implications being Capital Gains Tax (CGT), VAT, Transfer duty etc. then an Asset for Shares might be just what you are looking for as you will not be liable for any of these taxes if you follow the prescribed requirements.
