A business acquisition can look commercially attractive until the tax consequences of the transaction are calculated.
One of the most important decisions is whether the buyer acquires the business and its underlying assets or acquires the shares in the company that owns the business. The commercial result may appear similar, but the tax consequences for the buyer and seller can be very different.
CGT, VAT, income tax and the treatment of the underlying assets can materially affect the real value of the transaction. A structure that benefits the seller may not necessarily benefit the buyer, and tax consequences identified too late can change the economics of an otherwise attractive deal.
For CIBA members advising business owners, entrepreneurs and SME clients, this is where technical tax knowledge becomes commercial advice. Clients need more than a calculation after the transaction has been agreed. They need an accountant who can identify the tax consequences early enough to help them make an informed business decision.
This practical session with Ettiene Retief examines the tax implications of buying a business versus buying shares and shows practitioners how transaction structure can influence the final outcome for both buyer and seller.
The objective is simple: understand the tax before the client signs the deal.
How to get this session: CIBA members access it through their channel, log in and find it under My CPD. Not a member yet? Buy this single session, or join CIBA to unlock your full channel
R230,00 VAT incl.
The purchase price is only one part of the cost of acquiring a business.
How the transaction is structured can determine what the buyer actually acquires, how different elements of the transaction are treated for tax purposes, which taxes may arise and whether the anticipated commercial value of the transaction is ultimately achieved.
This session examines asset and share transactions from a practical tax perspective, using transaction outcomes to demonstrate where apparently reasonable deals can produce unexpected consequences.
Delegates will consider the implications of CGT, VAT and income tax, common structuring mistakes and the tax issues that should be identified before clients commit themselves to a transaction.
Importantly, the session positions the CIBA practitioner at the decision-making stage of the deal, rather than only becoming involved once the transaction has been concluded and the tax consequences need to be processed.
This is an opportunity for members to move beyond retrospective compliance. A practitioner who understands the tax implications of the available structures can help a client ask better questions, compare alternatives, understand the financial consequences and identify when legal, valuation or specialist tax input should be obtained.
That strengthens the accountant’s role as a trusted business adviser while ensuring that the practitioner remains within the boundaries of their professional competence and mandate.
Ettiene Retief – Tax Specialist, Professional Accountant (SA), Professional Tax Specialist (SA), M.Inst.D, CPA, AFA MIPA
After attending this session, you should be better equipped to:
Understanding what is being acquired and why the distinction changes the tax analysis.
Key CGT, VAT and income tax considerations arising from the different structures.
Why the preferred tax outcome for one party may not be the preferred outcome for the other.
Common planning mistakes, unintended consequences and issues that should be identified before agreements are finalised.
Tax planning, due diligence questions, client expectations and knowing when specialist input is required.
Using tax knowledge to help clients evaluate transaction structures and make better-informed commercial decisions.
Professional Value
The greatest value in transaction tax advice often arises before the transaction is signed.
When an accountant becomes involved only after the structure has been agreed, the opportunity to identify or avoid an adverse tax consequence may already have been lost.
For CIBA members, the professional opportunity is to bring accounting, tax and commercial thinking together. Understanding the difference between buying assets and buying shares enables practitioners to identify risks earlier, improve discussions between buyers and sellers and help clients understand the true financial consequences of the transaction they are considering.
It can also create legitimate opportunities for additional professional services around transaction planning, tax analysis, due diligence, financial information, valuations and post-transaction accounting and compliance, where these fall within the practitioner’s competence and mandate.
The value of the accountant is therefore not simply in calculating the tax correctly after the event. It is in knowing which questions need to be asked before the client commits to the deal.
A good deal is not determined by the price alone. The structure can decide whether the numbers ultimately work.
The following event is awarded 2 CPD units in Taxation.
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