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

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dc.contributor.authorBoakye, Stephen
dc.date.accessioned2019-07-30T11:22:25Z
dc.date.available2019-07-30T11:22:25Z
dc.date.issued2018
dc.descriptionA 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.abstractThe 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 Acten_ZA
dc.description.librarianMT 2019en_ZA
dc.facultyFaculty of Commerce, Law and Management
dc.identifier.urihttps://hdl.handle.net/10539/27823
dc.language.isoenen_ZA
dc.rights.holderUniversity of the Witswatersrand, Johannesburg
dc.schoolSchool of Accountancy
dc.subjectIncome tax
dc.subjectSouth African income tax
dc.subjectContingent liabilities
dc.subjectSouth African Income Tax Act
dc.subjectGeneral tax principles
dc.subjectSouth African Revenue Service (SARS)
dc.subjectInterpretation Note 94
dc.subjectUCTD
dc.subject.otherSDG-8: Decent work and economic growth
dc.titleIncome tax treatment of the transfer of contingent liabilities during the sale of a businessen_ZA
dc.typeDissertationen_ZA
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