Unbundling is an important mechanism to cut the high level of concentration in the economy and its ownership in a few hands
New proposals for the tax treatment of unbundling transactions will have a dampening effect on this form of corporate restructuring, PwC tax policy leader Kyle Mandy believes.
The Treasury and Sars briefed the committee on the bill as well the draft Tax Administration Laws Amendment Bill on Wednesday. Mputa explained that the rationale for excluding nonresidents was that they are outside the SA tax net, which meant that the tax deferral provided in the relief became a tax exemption.
“The major concern lies with listed companies because in many if not most of them, if you add up all the tax-exempt shareholders including retirement funds, they will exceed the 20% limit and they won’t qualify for any unbundling relief.” A separate proposal related to the ability of contract miners to claim accelerated capital expenditure deductions would also be controversial, Mandy said.
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