The South African Revenue Service (SARS) recently released a binding class ruling (BCR 44) dealing with the tax consequences of the repurchase of certain non-redeemable, non-participating preference shares. Background The applicant was a public company listed on the Johannesburg Stock Exchange (JSE) which issued preference shares to certain persons.
Category: Shares
Buy-back of ordinary shares by a company in excess of market value
SARS recently issued the above Binding Private Ruling which deals with the question whether the buy-back of ordinary shares by a company at an amount in excess of the market value of the shares, in circumstances where the purpose of the buy-back was to maintain the BBBEE status of the company, has donations tax effects or would invoke paragraph 38 of the Eighth Schedule.