Sales of trading stock to connected persons
Sean Kleynhans The tax system has rules which are intended to prevent character mismatches through related (connected) person sales. Under these rules, taxpayers purchasing assets (including trading stock) from connected persons receive a tax cost that is the lower of the purchaser’s or the connected person’s tax cost. Trading stock, in Treasury’s view, is unlikely to give rise to manipulation which the anti-avoidance rules target, will no longer be subject to these connected person anti-avoidance provisions.
