Income Tax Act, 1962 (Act No. 58 of 1962)Chapter II : The TaxesPart II : Special Provisions Relating to Companies40CA. Acquisitions of assets in exchange for shares |
Where a company acquires any asset, as defined in paragraph 1 of the Eighth Schedule—
| (a) | from any person in exchange for shares issued by that company, that company must be deemed to have actually incurred an amount of expenditure in respect of the acquisition of that asset which is equal to the sum of— |
| (i) | the market value of the shares immediately after the acquitision; and |
| (ii) | any deemed capital gain determined in terms of section 24BA(3)(a) in respect of the acquisition of that asset; or |
| (b) | in terms of an asset-for-share transaction as contemplated in section 42, a substitutive share-for-share transaction as contemplated in section 43 or an amalgamation transaction as contemplated in section 44 in respect of which a deemed capital gain is determined in terms of section 24BA(3)(a) in respect of the acquisition of that asset— |
| (i) | by that company; or |
| (ii) | by any person that acquired that asset from that company in terms of any transaction contemplated in Part III of Chapter II, |
that company or that other person must be deemed, in addition to the amount of expenditure for which the asset is deemed to have been acquired by that company or that other person as a result of the application of sections 42(2)(b), 43(2)(b) or 44(2)(a)(ii)(aa), to have incurred an amount of expenditure equal to that deemed capital gain immediately before a disposal of that asset in a transaction other than a transaction contemplated in Part III of Chapter II.
[Words following Paragraph (b) substituted by section 35(1) of the Taxation Laws Amendment Act, 2023 (Act No. 17 of 2023), Notice No. 4226, GG49894, dated 22 December 2023 - comes into operation on 1 January 2024 and applies in respect of any acquisition of an asset on or after that date (section 35(2))]
[Section 40CA substituted by section 23(1) of the Taxation Laws Amendment Act, 2021 (Act No. 20 of 2021), Notice No. 770, GG45787, dated 19 January 2022 - comes into operation on 1 January 2022 and applies in respect of any acquisition of an asset on or after that date (section 23(2))]