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Hi Sir,
Just a quick theory question.. I read somewhere that compared to a cash consideration a share for share exchange is less likely to create a capital gains tax liability. Can you explain why please? I would have thought a share for share exchange would cause a capital gain if the shares were sold?
thanks
Yes – their will be a capital gains tax liability when the shares are sold. But when the acquisition takes place, there is no sale. If the acquisition was for cash then there would be a sale and therefore potentially tax payable.
With a share exchange, maybe they will sell the shares in the future (and therefore face a potential tax bill) but maybe they won’t 🙂
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