Category: Section 64EB (ITA) – Deemed beneficial owners of dividends

Section 64EB

 

Section 64EB inserted by section 85 of Act 22 of 2012 effective on 1 September 2012 and substituted by section 103 of Act 31 of 2013 effective on 4 July 2013.

Section 64EB (ITA) – Deemed beneficial owners of dividends

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64EB.    Deemed beneficial owners of dividends

(1)       For the purposes of this Part, where-

(a)     a person contemplated in section 64F(1) acquires the right to a dividend in respect of a share, including a dividend that has not yet been declared or has not yet accrued, by way of cession; and

(b)     an amount in respect of that dividend is received by or accrues to the person who acquired that right,

any person ceding that right is deemed to be the beneficial owner of that dividend: Provided that this subsection does not apply to any cession in respect of a share if the person to whom those rights are ceded holds all the rights attaching to the share after the cession.

[Subsection (1) amended by section 61(1)(a) of Act 23 of 2018 and by section 37(1)(a) of Act 23 of 2020 effective on 1 January, 2021 and applicable in respect of amounts paid on or after that date in respect of shares that are borrowed or acquired in terms of a collateral arrangement]

(2)       For the purposes of this Part, where-

(a)     a person that is –

(i)      a company which is a resident;

(ii)     the government of the Republic in the national, provincial or local sphere;

[Subparagraph (ii) substituted by section 69 of Act 43 of 2014 effective on 4 July 2013]

(iii)    a public benefit organisation approved by the Commissioner in terms of section 30(3);

(iv)    a trust contemplated in section 37A;

(v)     an institution, board or body contemplated in section 10(1)(cA);

(vi)    a fund contemplated in section 10(1)(d)(i)or(ii);

(vii)   a person contemplated in section 10(1)(t);

(viii)  ……….

[Subparagraph (viii) deleted by section 74 of Act 25 of 2015 effective on 8 January 2016]

(ix)    ……….

[Subparagraph (ix) deleted by section 74 of Act 25 of 2015 effective on 8 January 2016]

(x)     a portfolio of a collective investment scheme in securities;

(xi)    any person to the extent that the dividend constitutes income of that person;

(xii)   ………..

[Subparagraph (xii) amended by section 69 of Act 43 of 2014 effective on 4 July 2013, deleted by section 74 of Act 25 of 2015 effective on 8 January 2016]

(xiii)  any fidelity or indemnity fund contemplated in section 10(1)(d)(iii), or

[Subparagraph (xiii) amended by section 69 of Act 43 of 2014 effective on 4 July 2013]

(xiv)   a small business funding entity as contemplated in section 10(1)(cQ).

[Subparagraph (xiv) added by section 69 of Act 43 of 2014 effective on 4 July 2013]

borrows from another person or acquires a listed share in terms of a collateral arrangement entered into with another person; and

[Paragraph (a) amended by section 61(1)(b) of Act 23 of 2018 and by section 37(1)(b) of Act 23 of 2020 effective on 1 January, 2021 and applicable in respect of amounts paid on or after that date in respect of shares that are borrowed or acquired in terms of a collateral arrangement]

(b)     a dividend in respect of that share or any amount determined with reference to a dividend in respect of that share is received by or accrues to that person,

[Paragraph (b) substituted by section 61(1)(c) of Act 23 of 2018 and by section 37(1)(c) of Act 23 of 2020 effective on 1 January, 2021 and applicable in respect of amounts paid on or after that date in respect of shares that are borrowed or acquired in terms of a collateral arrangement]

any amount paid by that person to that other person not exceeding that dividend or amount determined with reference to a dividend in respect of that share is deemed to be a dividend paid by that person for the benefit of that other person.

[Subsection (2) amended by section 69(1)(c) of Act 43 of 2014, by section 61(1)(d) of Act 23 of 2018 and by section 37(1)(d) of Act 23 of 2020 effective on 1 January, 2021 and applicable in respect of amounts paid on or after that date in respect of shares that are borrowed or acquired in terms of a collateral arrangement]

(3)       For the purposes of this Part, where-

(a)     a person that is contemplated in section 64F(1) acquires a share in a listed company (or any right in respect of that share) from another person;

[Paragraph (a) substituted by section 61 of Act 23 of 2018 effective on 1 January 2019, applies in respect of years of assessment commencing on or after that date]

(b)     that acquisition is part of a resale agreement between the person acquiring that share and that other person or any other company forming part of the same group of companies as that other person; and

[Paragraph (b) amended by section 61 of Act 23 of 2018 effective on 1 January 2019, applies in respect of years of assessment commencing on or after that date]

(c)     a dividend in respect of that share is received by or accrues to that person,

[Paragraph (c) added by section 61 of Act 23 of 2018 effective on 1 January 2019, applies in respect of years of assessment commencing on or after that date]

that other person or other company is deemed to be the beneficial owner of that dividend.

(4)     For the purposes of this section, ‘resale agreement’ means the acquisition of a share by any person subject to an agreement in terms of which that person undertakes to dispose of that share or any other share of the same kind and of the same or equivalent quality at a future date.