The tax implications in relation to the assumption of contingent liabilities in partial settlement of the purchase price of assets acquired as part of a going concern have been addressed by the South African Revenue Service (SARS).
The initial views of SARS regarding the tax implications for the seller and purchaser in relation to the assumption of such contingent liabilities (specifically “free-standing contingent liabilities”) would include, for example, provisions for bonuses, leave pay, warranties, etc.
