REITs and corporate reorganisations: 2018 updates
The following is a summary of the latest amendments pertaining to REITs in the context of corporate reorganisation transactions which have been effected to the Act in terms of the Taxation Laws Amendment Act, 2017 (the “TLAA”).
Corporate reorganisation provisions and REITS: problem solved
In terms of the provisions contained in sections 42 (asset-for-share transactions) and 44 (amalgamation transactions) of the Act, in instances where a party disposes of an allowance asset to another party, the recipient is required to acquire that asset as an allowance asset in order for the so called “rollover” provisions to apply.
Immovable property will generally qualify as an allowance asset where the owner is entitled to claim an allowance in terms of, inter alia, sections 11(g) 13, 13bis, 13ter, 13quat, 13quin and 13sex.
However, a REIT is prohibited from claiming the abovementioned capital allowances in respect of immovable property in terms of section 25BB(4) of the Act.
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