Transactions between connected persons that are not at an arm’s length price must be treated as taking place at market value. It frequently happens in large partnerships that new partners are not required to pay for goodwill on entry nor are retiring partners paid for goodwill by the remaining partners. An amount would be received for goodwill only if the partnership were dissolved or sold as a going concern. SARS accepts that in these circumstances the partners are acting at arm’s length and that the proceeds derived by a retiring partner should not be artificially increased to include goodwill for which no consideration has been received. Likewise a retiring partner who has not paid for goodwill on entry must not include goodwill in market value on 1 October 2001 unless it is disposed of for a consideration. This would in any event preclude the claiming of a market value loss on disposal of an asset acquired and disposed of for no consideration and it also precludes the claiming of a loss in respect of goodwill acquired before valuation date from a connected person.