| Commentary

264.1 In general

| Commentary

264 Relief in respect of demergers of trades or trading subsidiaries

264.1 In general

Under general tax principles, where shareholders receive shares as a result of a company reconstruction, merger or demerger other than in the context of a winding up, prima facie, the ‘profit element’ involved would be treated as an income distribution1 without specific relieving provisions. In the cases of reconstructions and mergers, the transferring company will become an empty shell which it is intended to wind up following the reconstruction or merger2. In the case of demergers, however, winding up the transferring company is

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