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Capital Gains Tax (“CGT”) is a form of income tax that is levied at a fixed rate when an asset is disposed of for an amount exceeding its base costs. Since its introduction, taxpayers have fathomed ways to avoid the payment of CGT. Usually a disposal of shares will be subject to CGT, unless such a disposal was structured as an issue of shares by the target company to the “purchaser”, followed by a corresponding buyback of shares by the target company from the “seller”.

The Tax Administration Act (“the Act”) allows SARS the right to impose tax penalties on taxpayers who fail to pay their taxes, or submit returns as and when required. The Act distinguishes mainly between two types of penalties:

Small- and medium-sized businesses customarily struggled to access venture finance, which is essential for its development and growth. In an attempt to assist small- and medium-sized business (and specifically junior mining companies) in attaining access to venture finance, the legislature included a tax incentive associated with such investments (per section 12J of the Income Tax Act).

A partnership is a legal relationship brought about by a contract between two or more persons, creating a concept of participation amongst the partners. Each partner will contribute to the business, with the object of making and sharing profits. For the duration of an ordinary partnership all the partners will be deemed to be joint co-creditors and joint co-debtors towards third parties.

According to the Income Tax Act (the ‘‘Act’’), a ‘disposal’ of assets includes the forfeiture, termination, redemption, cancellation, surrender, discharge, relinquishment, release, waiver, renunciation, expiry or abandonment of an asset.

Various remedies for the protection of minority shareholders exist under the Companies Act. One of which is a shareholder’s appraisal right that allows a shareholder to demand the company to buy-back his / her shares at fair value.

Section 42 of the Income Tax Act makes no provision for the automatic exemption from transfer duty where fixed property is acquired as a result of an asset-for-share transaction.

A Company’s shares may be for the benefit of one person (“Beneficial Shareholder”) and be registered in the name of another person (“Registered Shareholder”), except to the extent that a company’s Memorandum of Incorporation provides otherwise. As such, the rights depicted in the share register is independent of the ownership of the shares.

The Minister of Trade and Industry Dr. Rod Davies announced, in the Government Gazette of 9 June 2017 (“Publication Date”), that all Major B-BBEE Transactions must be registered with the B-BBEE Commission.

The Chief Master’s Directive issued in March 2017, (the “Directive”), announced new changes to be implemented with respect to the administration of all trusts. The Directive demands the appointment of an independent trustee where the trust is registered for the first time with the Master’s Office and it emerges from the trust deed that the trust is a “family business trust”. This requirement results from the judgment in Land and Agricultural Bank of South Africa v Parker and Others, where the court determined that the Master must restrict or prevent the abuse of trusts.

In the case of Roazar CC v The Falls Supermarket CC 2017, Falls Supermarket (hereinafter ‘‘Falls’’) leased a premises from Roazar Close Corporation (hereinafter ‘‘Roazar’’). Apart from the main lease agreement, two other agreements between the parties were relevant, in terms whereof additional monies were agreed to be paid in cash by Falls to the individual members of Roazar. So-called off-the-record payments or “kickbacks”.

The Caveat Subscriptor is a common law principle that binds parties to an agreement reduced to writing and signed by the parties, irrespective of their true intentions, understanding or interpretation of the written agreement.