By Sean Kleynhans
There are a number of long-standing anti-avoidance rules governing the cross issue of shares essentially denying a taxpayer a tax cost. It has come to the attention of national treasury that these cross rules are impractical in South Africa due to the frequency of cross-issues in commercial transactions as a funding mechanism for share schemes (in particular in BEE transactions). The anti-avoidance rules regarding cross issues will be reworked. It is proposed that the zero base cost rule will either be eliminated or narrowed. The changes will be designed to trigger immediate taxation where value, through a cross issue or asset for share transaction, will move to exempt entities.