FIRSTMATE BLOG: CAPTAINS LOG

Carried Forward Tax Losses18.09.2014

Question
Our client is inheriting a company from a friend who has recently passed away. The deceased shareholder owned 100% of the company.

The company has tax losses. Will these losses be forfeited due to the shareholding change?

Answer
No. There is no breach of shareholder continuity.

The death of a shareholder does not affect the shareholder continuity requirements that must be met by companies to enable carried forward tax losses, imputation and dividend withholding payment credits, etc.

For continuity purposes, where a person has acquired shares as a beneficiary or trustee under the will or on the intestacy of a deceased person, the beneficiary or trustee is deemed to have acquired the shares on the date the shares were acquired by the deceased person and to have held them since that time.

Accordingly, no breach of continuity occurs as a result of the shareholder’s death.

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