50/50 (2)members in cc sell 50% of their membership to third party, what tax will they pay,...?

[Annz]

Three scenarios: two equal members of cc asset (farm) value approx r6m want to sell to two non members 25 shares each, (retaining the fixed asset,being a non producing small farm with two residences where the existng members live) and, what tax will they pay on their shares? Can one deduct the cost of input (Purchase price, improvements etc from the share price before calculating tx?) 2nd: can one sell this whole cc asset, and buy another asset either in SA or very possibly outside SA, as the main asset of the cc, and investing the dividends into the cc account to be drawn down as monthly loan repayment? thus possibly not paying such huge tax on the sale of the business out of the cc...as cc will still have an asset, but not at this address?What will the tax implication be? All the farmers surrounding us are inputting into their properties are a phenomenal rate - their improvements are costing them millions - perhaps they know something we dont, about expro without compo - anyone? Thanks so much

[dellatjie]

Yoh Annz, this is a very complicated question, it would be better to see an expert with all the detail before making a decision, as the repercussions can be serious if you do not handle this matter correctly.

[Andromeda]

The tax, if any, to the sellers is capital gains tax, as you seem to know. The cost of the shares is precisely what it says in the financial statements, I assume a trivial amount, and not the cost of the underlying assets.

The original cost of the property and subsequent cost of improvements were incurred by the close corporation, not the sellers. So if the close corporation sells the property, it will presumably pay capital gains tax on that profit, depending on a number of factors, but that is the principle.

That which remains it may do with as it wishes; whether acquiring a new asset or paying a dividend to the members. That dividend is subject to 20% tax.