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Thread: Tax implications of changes in membership of a CC

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    Question Tax implications of changes in membership of a CC

    Hi,

    I just need some clarity on the following scenario please:

    Three of us hastily formed a closed corporation a few months ago, in order to be able to import goods on very short notice (company or cc needed to get import licence). Due to the short timescales available, and the fact that we do not live close to each other, the cc only has one member at the moment (even though we contributed money equally).

    The business has since acquired stock and started selling. All we want to do now is rectify the members situation, i.e. split the 100% (R100) membership interest between the 3 of us.

    Am I right that we can just do the change, and since the amounts involved will not be based on the actual company value, but will just be R33 each, we do not have to worry about capital gains tax as such? This is only supposed to be an admin change anyway... Also, the business is not profitable yet.

    I would really appreciate some insight on this issue.

    Many thanks,
    avdl

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    Site Caretaker Dave A's Avatar
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    Yep - if I understand you right you should be pretty safe. My understanding is you're just correcting the members record at CIPRO. From a financial point of view, the members have been partners right the way through.

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