A critical analysis of section 45 of the income tax act 58 of 1962.
Nyoka, Rejoice Nombulelo
The introduction of CGT in SA resulted in the birth of the corporate restructuring rollover tax relief to avoid tax on the transfer of assets within the same economic unit. Section 45 of the Act specifically provides a deferral tax rollover relief for the transfer of assets within the same group of companies. The built-in anti-avoidance rules in section 45 of the Act did not prevent taxpayers from abusing this tax rollover relief, instead it gave birth to innovative tax-free exit from investments and debt-push down schemes. Lawmakers mitigated the tax relief abuse by implementing burdensome rule-based anti-avoidance rules. This study aims to critically analyse the intended purpose of section 45 of the Act and how the rule-based anti-avoidance rules in section 45 of the Act unduly hamper the efficacy of this tax relief.
A research report submitted partial fulfilment of the requirements for the degree of Master of Commerce to the Faculty of Commerce, Law and Management, Wits School of Accountancy, at the University of the Witwatersrand, Johannesburg, 2023