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Sean Wheller
Home arrow Property Articles arrow What Does Connected Person Mean in Tax
What Does Connected Person Mean in Tax
Wednesday, 14 May 2008
Recently on PIN Forum there has been a discussion about “round trip financing” and the dangers related to this. If you wish to read the thread before you read this article it can be found here (component/option,com_smf/Itemid,28/topic,925.0/) . As a general summary, the problem for investors is when the start moving around money between people that are the same, or in other words connected persons and /or entities. This falls under some heavy issues discussed in that thread about “round trip financing” with no commercial substance and much more. Section 80 of the income tax act no 58 of 1962 says in detail what a tax avoidance agreement is. The act deals with sections such as lack of commercial substance and round trip financing, both of which are clearly identifiable in this cases of connected persons. In several of my articles I will be discussing special rules for connected persons. I therefore feel it is important to mention what a connected person is, for tax purposes. The act separates connected persons in relation to individuals, companies, members of partnerships and trusts.
Read more at: Property Investor Network



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