On July 24 2013 The South African Revenue Service (SARS) issued Binding Class Ruling 41 regarding the question of whether a dividend distributed by a foreign company constitutes a ‘foreign dividend’ as defined in Section 1 of the Income Tax Act (58/1962). The applicant was a foreign corporate partnership limited by shares. Its structure was essentially a hybrid between a partnership and a limited liability company, which is
Category: SARS Binding Rulings
New Binding Private Ruling: Transfer Of Debtors Book
Author: Heinrich Louw (CliffeDekkerHofmeyr) The South African Revenue Service (SARS) released Binding Private Ruling 154 (ruling) on 3 September 2013. The ruling deals with the transfer of a debtors book as part of a transaction in terms of s45 of the Income Tax Act, No 58 of 1962 (Act) and to what extent a transferee may claim allowances for doubtful debts in terms of s11(j) of the Act.
Ruling on dividends tax on shares held by local branches
On June 19 2013 the South African Revenue Service (SARS) published Binding Private Ruling 148. The ruling dealt with whether the dividends tax rate applicable to dividends paid on shares held by a local branch of a foreign company can be reduced by a relevant double tax agreement. The facts were briefly as follows.
Binding private ruling on foreign asset-for-share transaction
On July 24 2013 the South African Revenue Service (SARS) released Binding Private Ruling 149, dealing with the disposal by a local company of foreign assets (shares) in exchange for shares in a foreign company. The applicant was a local company holding 100% of the issued shares in foreign Company A, which held the applicant’s various foreign investments.
STC credits: Planning required to ensure it does not go to waste
When dividends tax was introduced with effect from 1 April 2012 many companies still possessed STC credits. These STC credits arose from the fact that more dividends were received by or accrued to the company in the last dividend cycle than dividends declared during such a dividend cycle. The balance of STC credits as at 31 March 2012 are carried forward into the dividends tax system in terms of section 64J of the Income Tax Act (hereafter the Act).
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) .
"Adequate consideration" under Section 58(1) of the Income Tax Act
Generally, donations tax is triggered where a person makes a gratuitous disposal of property. Where BEE transactions are concerned, property (eg. shares) is often disposed of at a value below market value. In such cases there are usually good arguments to be made that the disposal is not gratuitous because some indirect commercial benefit will accrue to the person disposing of the property – it makes “