Advisories on Corporate Rollover, Acquisitions, and Mergers

The Corporate Rules allow various transactions affecting capital outlay, assets generally, and equity structures to be executed tax-neutrally whereby the taxation associated with a particular transaction is deferred or rolled over. The rules generally apply to company groups but also find application in instances where a person is in a specific relationship with a company or group of companies. Over and above compliance with the specific anti-avoidance rules contained in the corporate rules, our due diligence has constant regard to the General Anti-Avoidance Rules (GAAR) which reside in Sections 80A - L of the Income Tax Act. These rules would find application if the requirements of the corporate rules have all been ticked, but the transaction itself is contrary to the spirit of the legislation and was concluded with the sole or main purpose of extracting a tax benefit. Should the rules be applied, an otherwise tax-neutral transaction can easily result in onerous tax burdens.