Income tax treatment of the transfer of contingent liabilities during the sale of a business

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dc.contributor.author Boakye, Stephen
dc.date.accessioned 2019-07-30T11:22:25Z
dc.date.available 2019-07-30T11:22:25Z
dc.date.issued 2018
dc.identifier.uri https://hdl.handle.net/10539/27823
dc.description A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in partial fulfillment of the requirements for the degree of Master of Commerce (specialising in Taxation) en_ZA
dc.description.abstract The objective of this report is to analyse the South African income tax consequences of the assumption of contingent liabilities such as leave pay provisions and bonus provisions during the transfer or sale of a business. This report will consider two methods utilised to transfer contingent liabilities as part of a sale of a business. An analysis of how these two methods have been derived will be performed as part of this report. The report will then consider the income tax implication of the transfer of contingent liabilities under each of the methods. Overall, this report will critically analyse the income tax implications of the assumption of contingent liabilities during the sale of a business. A business generally consists of assets and liabilities. Businesses are often sold as a single unit although for income tax purposes, a distinction would have to be made on the particular assets sold.1 The current South African Income Tax Act caters for the income tax implication of selling assets in a business.2 It however seems to be silent on the income tax implications in instances where liabilities including contingent liabilities are assumed as part of the sale of assets.3 As a result, the income tax implication is subjected to the general tax principles which sometimes yield uncertainties from a taxpayer’s perspective. In an effort to clarify uncertainties in relation to the income tax implication of the assumption of contingent liabilities as part of the sale of a business, the South African Revenue Service in December 2016 released Interpretation Note 94. This report will, firstly, test the legal nature of Interpretation Notes with specific reference to reliance being placed on such Interpretation Notes in relation to the interpretation of the Income Tax Act en_ZA
dc.language.iso en en_ZA
dc.title Income tax treatment of the transfer of contingent liabilities during the sale of a business en_ZA
dc.type Thesis en_ZA
dc.description.librarian MT 2019 en_ZA


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