Results 1 to 3 of 3

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

  1. #1
    New Member
    Join Date
    Sep 2019
    Location
    Western Cape
    Posts
    2
    Thanks
    0
    Thanked 0 Times in 0 Posts

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

    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

  2. #2
    Silver Member
    Join Date
    Sep 2012
    Location
    Louis Trichardt
    Posts
    300
    Thanks
    54
    Thanked 39 Times in 35 Posts
    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.

  3. #3
    Silver Member
    Join Date
    Feb 2016
    Location
    Johannesburg
    Posts
    454
    Thanks
    29
    Thanked 127 Times in 114 Posts
    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.

Similar Threads

  1. [Question] Selling membership in CC
    By Carien01 in forum Business Finance Forum
    Replies: 8
    Last Post: 15-Oct-18, 12:56 PM
  2. [Question] CC Membership
    By idube in forum General Business Forum
    Replies: 9
    Last Post: 10-Jan-11, 04:56 PM
  3. [Question] change in cc membership
    By AmithS in forum General Business Forum
    Replies: 3
    Last Post: 19-Oct-10, 07:12 PM
  4. [Question] Tax implications of changes in membership of a CC
    By Avdl in forum Tax Forum
    Replies: 1
    Last Post: 17-Oct-10, 06:52 AM
  5. [Question] 100% Membership buy out
    By AmithS in forum General Business Forum
    Replies: 4
    Last Post: 03-Apr-09, 01:11 PM

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
  •