Section 14: Transfer of trading stock with other assets or for inadequate consideration

14. Transfer of trading stock with other assets or for inadequate consideration (1) Subject to this Act, where any trading stock is sold or otherwise transferred together with other assets, the part of the consideration attributable to the trading stock shall be determined by the Director-General, and the part of the consideration so determined shall be deemed to be the price paid for the trading stock by the purchaser. (2) For the purpose of subsection (1), any trading stock which has been transferred otherwise than by sale shall be deemed to have been sold, and any trading stock so transferred and any trading stock which has been sold for a consideration other than cash shall be deemed to have realised the market price at the day on which it was so transferred or sold, but where there is no market price the trading stock shall be deemed to have realised a price determined by the Director-General. I5 – 19 [Issue 6] Income Tax Act (3) In this section— “trading stock” includes any other property which, as and when realised, produces income for the person under section 10 (3) (c). (4) Where any trading stock is sold or transferred without consideration in money or money’s worth or for a consideration that is less than its market price or true value on the day of the sale or transfer— (a) the trading stock shall be deemed to have been sold at and to have realised the market price on the day of the sale or transfer, but shall, where there is no market price, be deemed to have been sold at and to have realised a price determined by the Director-General; (b) the price which under this section the trading stock is deemed to have realised shall be taken into account in calculating the gross income of the person selling or transferring the trading stock; and (c) the person acquiring the trading stock shall, for the purpose of calculating his net income, be deemed to have purchased the trading stock at the price which under this section the trading stock is deemed to have realised. [S. 14 amended by s. 18 (e) of Act 15 of 2006 w.e.f. 1 July 2006.]