A “last minute” amendment in the Taxation Laws Amendment Act No. 22 of 2012, relating to the income tax treatment of dividends received by a company in certain circumstances, may have far-reaching tax implications for companies and therefore need to be taken into account for all dividends received or accrued on or after 25 October 2012.
Category: Dividend Tax
Dividends withholding tax implications where a resident company is a beneficiary of a share scheme trust
Dividends withholding tax (“DWT”) was introduced into the Income Tax Act 58 of 1962 (“the Act”) with effect from 1 April 2012. Section 64F of the Act exempts the withholding of DWT in respect of the receipt of dividends, to the extent that it does not consist of dividends in specie by “beneficial owners” which are listed in the section. A resident company is included in the exemption in terms of the list in section 64F(a) .
Changes to the taxation of dividend cessions and manufactured dividends
In the 2013 Budget Review, which was released on 27 February 2013, specific mention was made that a research project is underway in which consideration is being given to a unified treatment of dividend cessions and manufactured dividends. As part of this project it noted that consideration will be given to anti-avoidance rules to eliminate the shift in the income from taxable parties to exempt parties. The Budget Review states that the tax impact of a dividend transfer depends on wh
SARS and your bank account
On 29 February 2012, the South African Revenue Service (SARS) issued a notice in Government Gazette No 35090 (Notice No 173) relating to the liability of certain institutions, most notably banks, to furnish SARS with financial information about taxpayers. The notice was issued in terms of s69 of the Income Tax Act, No 58 of 1962, which section has been superseded by s26 of the Tax Administration Act, No 28 of 2011 (TAA).
Anti-avoidance: share repurchases through subsidiaries
Judgment was handed down on 16 November 2012 by the Tax Court in the case of A Ltd v Commissioner for the South African Revenue Service. The facts were as follows. A Ltd was a company listed on the JSE
High Court interprets NWK judgment
Judgment in the case of Mariana Bosch and Ian McClelland v Commissioner for the South African Revenue Service (case no A94/2012) was handed down on 20 November 2012 by a full bench of the Western Cape High Court. The main judgment was written by Davis J (Baartman J concurring) and a separate judgment was written by Waglay J. The matter was on appeal from the Tax Court.
South Africa Closes Loopholes In New Dividend Tax
by Lorys Charalambous, Tax-News.com, Cyprus South Africa’s Minister of Finance, Pravin Gordhan, has announced the closing of tax avoidance schemes which have arisen with regard to the operation of the new dividends tax.
Cash versus in specie dividends
With the introduction of the new dividends tax on 1 April 2012, the distinction between cash dividends and dividends in specie requires consideration. Where a company declares and pays a dividend and that dividend consists of a distribution of an asset in specie, the amount of the dividend is dee
The payment of dividends out of negative reserves
The issue has often arisen as to whether the payment of a dividend that results in the creation of negative reserves can still be said to be a dividend or whether it is effectively funded from the share capital of a company. For instance, a company can have 100 as equity that is reflected as 100 in assets. However, the company then declares a dividend that results in it effectively having negative reserves of 100 in circumstances where the assets of 100 are used to fund the dividend.
Dividends tax and the beneficial owner – should a dividend be paid to a trust?
The issue pertaining to whether a trust is liable for dividends tax should a company pay a dividend to the trust as the registered owner of the shares has recently been clarified by SARS. By way of background, dividends tax must be paid by the beneficial owner, the concept being defined as the person that is entitled to the benefit of the dividend attaching to a share.