The South African Revenue Service (SARS) has issued a draft Binding General Ruling (BGR), the interpretation of Section 46 of the Income Tax Act, which deals with unbundling transactions.
A company under an unbundling transaction (the unbundling company) distributes all the shares in another company (the unbundled company) to its shareholders. The unbundling company would have been deemed to dispose of the shares at market value, without Section 46, while the shareholders would be deemed to acquire them at the same market value.
