Results 1 to 5 of 5

Thread: HOW DO WE CEDE A LOAN ACCOUNT FROM ONE MEMBER TO ANOTHER??

  1. #1
    New Member
    Join Date
    Sep 2011
    Location
    Durban
    Posts
    8
    Thanks
    4
    Thanked 0 Times in 0 Posts

    Question HOW DO WE CEDE A LOAN ACCOUNT FROM ONE MEMBER TO ANOTHER??

    Can anyone advise me how to go about ceding my Close Corporation Loan Account to another member of the CC? My laon account is R600k. Are there any tax implications or any other implications that I should be aware of? Could anyone send me a sample of a cession form? Many thanks.

  2. #2
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    22,648
    Thanks
    3,304
    Thanked 2,676 Times in 2,257 Posts
    Blog Entries
    12
    Quote Originally Posted by Kari View Post
    Are there any tax implications or any other implications that I should be aware of?
    That's less about what you're ceding and more about why you're ceding the loan account.

  3. #3
    New Member
    Join Date
    Sep 2011
    Location
    Durban
    Posts
    8
    Thanks
    4
    Thanked 0 Times in 0 Posts
    Thank you for replying. Well, I have made a purchase (not related to the CC) from the other CC member and I am paying him by way of ceding my loan account to him as payment - he is prepared to accept this method of payment.

  4. #4
    Gold Member
    Join Date
    Jun 2010
    Location
    Johannesburg
    Posts
    843
    Thanks
    181
    Thanked 177 Times in 146 Posts
    Often in business the word "cede" is used with more of a temporary meaning. Eg you would cede an asset as security to a bank until you have repaid a loan. Then the asset becomes yours again. They just keep control of it for the period of the loan.

    In your case it seems you are actually paying the amount across to the other member. I believe all that is necessary here is a simple journal entry in the accounts showing his loan increasing by the amount and your decreasing by that same amount. It would also be an idea to have a copy of the agreement filed in the cc accounts books.

    Cession forms are typically used by banks and are for the "temporary" version.

    From a tax point of view, the other member will have to declare the purchase amount as income or capital gains to SARS.

    Thats my view, perhaps others out there will disagree or add some more?

  5. Thanks given for this post:

    Dave A (26-Sep-11)

  6. #5
    New Member
    Join Date
    Sep 2011
    Location
    Durban
    Posts
    8
    Thanks
    4
    Thanked 0 Times in 0 Posts
    Many thanks BusFact.....makes perfect sense. Yes, you are correct to assume that this is not a temporary cede but rather payment for a purchase. I shall ensure that I keep the agreement safe.

Similar Threads

  1. [Question] HELP - transfer of member loan account
    By sablelodge in forum Accounting Forum
    Replies: 3
    Last Post: 29-Jul-11, 03:32 PM
  2. [Question] Loan to cc?
    By Sandz in forum Accounting Forum
    Replies: 6
    Last Post: 22-Jul-11, 01:07 PM
  3. Member Loan Account and Deferred Salary
    By Swapo in forum Tax Forum
    Replies: 7
    Last Post: 05-Nov-10, 03:17 PM
  4. Loan account in CC
    By Darko in forum General Business Forum
    Replies: 2
    Last Post: 06-May-09, 01:57 PM

Tags for this Thread

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •