Section 59A: Transfer of loss on takeover or merger

59A. Transfer of loss on takeover or merger (1) Notwithstanding this Act, where— (a) a company takes over another company engaged in manufacturing activities; (b) 2 or more companies engaged in manufacturing activities merge into one company; (c) a company takes over, or acquires the whole or part of the undertaking of another company and the Minister has deemed such a take-over or transfer of undertaking to be in the public interest, I5 – 45 [Issue 9] Income Tax Act any unrelieved loss of the acquiree may be transferred to the acquirer in the income year in which the takeover takes place, on such conditions relating to safeguard of employment or on such terms and conditions as the Minister may approve. (2) Any unrelieved loss transferred under subsection (1) shall be deemed to be incurred by the acquirer in the income year in which the loss is transferred and shall be available for set-off against the net income of the acquirer. (3) Where, at any time before the expiry of 3 years from the date of the takeover or merger, more than 50 per cent of the number of employees of the acquiree taken over by the acquirer, or of the employees of both the acquiree and the acquirer, as the case may be, are made redundant, any loss transferred under subsection (1) shall be withdrawn and the amount of the loss so withdrawn shall be deemed to be the gross income of the acquirer in the income year in which the employees are made redundant. (4) For the purpose of this section— “acquiree” means a company of which the assets and liabilities have been acquired by another company through a takeover or merger; “acquirer” means a company which has acquired the assets and liabilities of another company by means of a takeover or merger. [S. 59A inserted by s. 9 (h) of Act 18 of 2003 w.e.f the year of assessment commencing on 1 July 2003; amended by s.19 (j) (iii) of Act 14 of 2005 w.e.f. 1 July 2005; s. 27 (i) of Act 18 of 2016 w.e.f. 1 July 2016 in respect of the year of assessment commencing on 1 July 2016 and in respect of every subsequent year of assessment.]