July 6, 2022

Section 42: Asset-for-share transactions

It is often the case that South African tax resident shareholders wish to reorganise their South African group of companies, for a multitude of commercial reasons, without the ultimate shareholders changing. One of these could potentially be to create a single holding company structure. Various group relief provisions are contained in the Income Tax Act No 58 of 1962 (“the Act”) which can be utilised to reorganise group structures in a manner that is tax neutral, i.e., without immediate tax consequences for its underlying shareholders. Section 42 of the Act is one such group reorganisation provision. Section 42 or ‘asset-for-share transaction’ […]
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