Tax and SARS knowledge base
When can group companies use section 45 intra-group rules?
Can a group transfer an asset internally under section 45?
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Direct answer
A group may be able to use section 45 for a qualifying intra-group transaction, but a transfer between related companies is not automatically enough. Section 45 is a statutory corporate-rule provision and the parties, group status, asset character, consideration and timing must meet the current law. Later events can also matter, so a transaction should be reviewed as part of the wider group plan.
The practical starting point is to treat the transfer as a real sale or transfer for legal and accounting purposes, while separately testing whether the tax rules provide a roll-over result. Do not assume the receiving company obtains a new tax cost or that the transferor has no later exposure.
What this means in practice
Groups often move a property, equipment, investment, trade, intellectual property or loan-related asset from one company to another to centralise functions or prepare for an external sale. The internal nature of the transfer can make documentation seem unnecessary. That is a common risk. Section 45 requires reliable evidence of the group structure and transaction, and the tax history of an asset can follow it.
The statutory wording and all applicable alternatives must be checked from the consolidated legislation. A label such as "subsidiary", "sister company" or "holding company" is not a substitute for the defined group test. Use the actual ownership, voting and legal-entity evidence rather than an informal group diagram.
SARS has also published a private ruling involving a de-grouping rule after earlier section 45 transactions. The ruling is fact-specific, but it illustrates a practical point: a later distribution, sale, restructuring or change in ownership can require the original transaction to be revisited. Build a monitoring process before the transfer is implemented.
Step-by-step
- Build a dated group map.
Identify every company involved, its tax residence, shareholding, voting rights, effective dates and any trusts, non-residents or minority interests. Prepare the group chart for the day before, the day of and the day after the transfer. Keep securities registers and agreements that support the chart.
- Describe the asset accurately.
Record the asset legal owner, use, market value, tax value, base cost, allowance history, debts secured over it and whether it is held as capital or trading stock. An internal asset transfer should have a signed agreement, a clear effective date and accounting entries that agree to the agreement.
- Test section 45 before committing to the terms.
Ask specialist advisers to test the current definition, parties, group conditions, asset treatment, consideration and exclusions. They should also review any linked funding, debt settlement, share issue or prior corporate-rule transaction. A tax review performed after a sale agreement is unconditional may have limited value.
- Map subsequent plans.
Record whether the group expects to sell shares, sell the asset, distribute a company, liquidate an entity, bring in an investor or move a company offshore. Update the section 45 review if the plan changes. A later deal that was never documented at the start can still affect the risk analysis.
- Implement consistently.
Align board resolutions, signing dates, accounting entries, asset-register changes, insurance, invoices and any registrations. If an asset is immovable property, inventory or an allowance asset, make sure the operational records show the new owner from the effective date. Preserve the old records as well.
- Monitor the structure.
Put a tax diary reminder against future changes in group membership, asset disposal, liquidation and distributions. Keep the original review and transaction file available to the finance team handling later transactions. Do not rely on institutional memory after personnel change.
Documents and records to keep
Keep dated group charts, security registers, agreements, resolutions, asset schedules, valuations, tax bases, allowance records, funding documents, accounting journals and proof of implementation. File the group tax review with any later sale, distribution or reorganisation papers.
Important limits and exceptions
This guide does not decide whether the companies are in the required group or whether a specific transfer qualifies. The corporate rules can interact with de-grouping consequences, debt rules, VAT, transfer duty, capital gains tax, recoupments and anti-avoidance provisions. Cross-border parties, financial instruments and connected-party arrangements need particular care.
When to get tailored advice
Obtain advice before signing an internal transfer of material assets or before a group sale. TaxProof can organise records and a group structure timetable. We cannot confirm section 45 treatment without the full facts and current law.