“listed company” means a company as contemplated in paragraph (a) of the definition of “listed company” in section 1;
Author: admin_kmos
“Hold” definition of section 41 of ITA
“hold” ……….
[Definition of “hold” deleted by section 54 of Act 15 of 2016 effective on 19 January 2017]
“Group of companies” definition of section 41 of ITA
“group of companies” means a group of companies as defined in section 1: Provided that for the purposes of this definition-
(i) any company that would, but for the provisions of this definition, form part of a group of companies shall not form part of that group of companies if-
(aa) that company is a company contemplated in paragraph (c), (d) or (e) of the definition of ‘company’;
(bb) that company is a non-profit company as defined in section 1 of the Companies Act;
(cc) any amount constituting gross income of whatever nature would be exempt from tax in terms of section 10 were it to be received by or to accrue to that company;
(dd) that company is a public benefit organisation or recreational club that has been approved by the Commissioner in terms of section 30 or 30A;
(ee) that company is a company contemplated in paragraph (b) of the definition of ‘company’, unless that company has its place of effective management in the Republic; or
(ff) that company has its place of effective management outside the Republic; and
(ii) any share that would, but for the provisions of this definition, be an equity share shall be deemed not to be an equity share if –
(aa) that share is held as trading stock; or
(bb) any person is under a contractual obligation to sell or purchase that share, or has an option to sell or purchase that share unless that obligation or option provides for the sale or purchase of that share at its market value at the time of that sale or purchase;
“Foreign financial instrument holding company” definition of section 41 of ITA
“foreign financial instrument holding company” ……….
[Definition of “foreign financial instrument holding company” substituted by section 49 of Act 45 of 2003, amended by section 32 of Act 32 of 2004, substituted by section 37 of Act 31 of 2005, section 28 of Act 20 of 2006, amended by section 32 of Act 8 of 2007, section 25 of Act 3 of 2008 and section 61 of Act 7 of 2010 and deleted by section 54 of Act 43 of 2014 effective on 20 January 2015]
Section 64F (ITA) – Exemption from tax in respect of dividends other than dividends comprising distribution of assets in specie
64F. Exemption from tax in respect of dividends other than dividends comprising distribution of assets in specie
[Heading of section 64F substituted by section 78 of Act 24 of 2011 and section 62 of Act 23 of 2018 effective on 17 January 2019]
(1) Any dividend is exempt from the dividends tax to the extent that it does not consist of a dividend that comprises a distribution of an asset in specie if the beneficial owner is-
[Words preceding paragraph (a) substituted by section 78 of Act 24 of 2011 and section 62 of Act 23 of 2018 effective on 17 January 2019]
(a) a company which is a resident;
(b) the government of the Republic in the national, provincial or local sphere;
[Paragraph (b) substituted by section 70 of Act 43 of 2014 effective on 20 January 2015]
(c) a public benefit organisation approved by the Commissioner in terms of section 30(3);
(d) a trust contemplated in section 37A;
(e) an institution, board or body contemplated in section 10(1)(cA);
(f) a fund contemplated in section 10(1)(d)(i) or (ii);
(g) a person contemplated in section 10(1)(t);
(h) a holder of shares in a registered micro business, as defined in the Sixth Schedule, paying that dividend, to the extent that the aggregate amount of dividends paid by that registered micro business to all holders of shares in that registered micro business during the year of assessment in which that dividend is paid does not exceed the amount of R200 000;
(i) a small business funding entity as contemplated in section 10(1)(cQ);
[Paragraph (i) substituted by section 72 of Act 7 of 2010, deleted by section 78 of Act 24 of 2011, re-inserted by section 70 of Act 43 of 2014 effective on 1 March 2015]
(iA) ……….
(j) a person that is not a resident and the dividend is a dividend contemplated in paragraph (b) of the definition of ‘dividend’ in section 64D;
(k) ……….
[Paragraph (k) added by section 86 of Act 22 of 2012 and deleted by section 62 of Act 23 of 2018 effective on 17 January 2019]
(l) any person to the extent that the dividend constitutes income of that person; or
(m) any person to the extent that the dividend was subject to the secondary tax on companies;
[Paragraph (m) added by section 86(1)(b) of Act 22 of 2012, amended by section 86(1)(c) of Act 22 of 2012 and section 70 of Act 43 of 2014 effective on 1 March 2015]
(n) any fidelity or indemnity fund contemplated in section 10(1)(d)(iii); or
[Paragraph (n) added by section 86 of Act 22 of 2012, amended by section 70 of Act 43 of 2014 effective on 1 March 2015]
(o) a natural person or deceased estate or insolvent estate of that person in respect of a dividend paid in respect of a tax free investment as contemplated in section 12T(1).
[Paragraph (o) added by section 70 of Act 43 of 2014 effective on 1 March 2015, substituted by section 75 of Act 25 of 2015 effective on 1 March 2015]
(2) Any dividend paid by a REIT or a controlled company, as defined in section 25BB, and received or accrued before 1 January 2014 is exempt from the dividends tax to the extent that the dividend does not consist of a dividend that comprises a distribution of an asset in specie.
[Subsection (2) added by section 86 of Act 22 of 2012 and substituted by section 104 of Act 31 of 2013 and section 62 of Act 23 of 2018 effective on 17 January 2019]
Section 64EB (ITA) – Deemed beneficial owners of dividends
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.
Section 64EA (ITA) – Liability for tax
64EA. Liability for tax
Any-
(a) beneficial owner of a dividend, to the extent that the dividend does not consist of a distribution of an asset in specie; or
(b) company that is a resident that declares and pays a dividend to the extent that the dividend consists of a distribution of an asset in specie,
is liable for the dividends tax in respect of that dividend.
[Section 64EA inserted by section 77(1) of Act 24 of 2011 and amended by section 84(1) of Act 22 of 2012 and by section 44 of Act 34 of 2019]
Section 64E (ITA) – Levy of tax
64E. Levy of tax
(1)
(a) Subject to paragraph 3 of the Tenth Schedule, there must be levied for the benefit of the National Revenue Fund a tax, to be known as the dividends tax, calculated-
(i) at the rate of 20 per cent; or
(ii) at such rate as the Minister may announce in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, with effect from a date mentioned in that Announcement,
of the amount of any dividend paid by any company other than a headquarter company.
(b) If the Minister makes an announcement contemplated in paragraph (a)(ii), that rate comes into effect on the date determined by the Minister in that announcement and continues to apply for a period of 12 months from that date subject to Parliament passing legislation giving effect to that announcement within that period of 12 months.
[Subsection (1) substituted by section 71 of Act 7 of 2010, section 6 of Act 13 of 2012, section 83 of Act 22 of 2012, section 11 of Act 14 of 2017 effective on 22 February 2017 and applies in respect of any dividend paid on or after that date and section 61 of Act 17 of 2017 effective on 18 December 2017]
(2) For the purposes of this Part, a dividend must, to the extent that the dividend-
(a) does not consist of a distribution of an asset in specie and is declared by a company that is-
(i) a listed company, be deemed to be paid on the date on which the dividend is paid; or
(ii) not a listed company, be deemed to be paid on the earlier of the date on which the dividend is paid or becomes due and payable; or
(b) consists of a distribution of an asset in specie, be deemed to be paid on the earlier of the date on which the dividend is paid or becomes due and payable.
(3) 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 must, for the purposes of subsection (1), be deemed-
(a) in the case of an asset which is a financial instrument listed on a recognised exchange as defined in paragraph 1 of the Eighth Schedule and for which a price was quoted on that exchange, to be equal to the ruling price of that financial instrument on that recognised exchange at close of business on the last business day before the date that the dividend is, in terms of subsection (2), deemed to be paid; or
(b) in the case of an asset which is not an asset contemplated in paragraph (a), to be equal to the market value of the asset on the date that the dividend is, in terms of subsection (2), deemed to be paid.
(4)
(a) Where, during any year of assessment, any amount is owing to a company by-
(i) a person that is-
(aa) not a company;
(bb) a resident; and
(cc) a connected person in relation to that company; or
(ii) a person that is-
(aa) not a company;
(bb) a resident; and
(cc) a connected person in relation to a person contemplated in subparagraph (i),
in respect of a debt, that company must, for the purposes of this Part, be deemed to have paid a dividend to the person contemplated in subparagraph (i), if that debt arises by virtue of any share held directly or indirectly in that company by a person contemplated in subparagraph (i).
[Paragraph (a) amended by section 83(1)(d) and (e) of Act 22 of 2012 and by section 28 of Act 5 of 2026]
(b) The amount of the dividend that is deemed to have been paid in terms of paragraph (a) must-
(i) be deemed to consist of a distribution of an asset in specie; and
(ii) for the purposes of subsection (1), be deemed to be equal to the greater of-
(aa) the market-related interest in respect of that debt, less the amount of interest that is payable to that company in respect of that debt for that year of assessment; or
[Item (aa) substituted by section 83(1)(g) of Act 22 of 2012 (as amended by section 200(1) of Act 31 of 2013) effective on 1 January, 2013]
(bb) nil.
[Paragraph (b) substituted by section 83(1)(f) of Act 22 of 2012 deemed effective on 1 April, 2012]
(c) Where during any year of assessment a company is deemed to have paid a dividend in terms of paragraph (a), that dividend must be deemed to have been paid on the last day of that year of assessment.
(d) For the purposes of this subsection, ‘market-related interest’, in relation to any debt owed to a company means the amount of interest that would be payable to that company on the amount owing to that company in respect of that debt for a period during a year of assessment if the debt had been owed for that period at the official rate of interest.
[Paragraph (d) substituted by section 83 of Act 22 of 2012 and section 61 of Act 17 of 2017 effective on 18 December 2017]
(e) This subsection does not apply to the extent that the amount owing to a company in respect of a debtcontemplated in paragraph (a) was deemed to be a dividend that was subject to the secondary tax on companies.
(5) For the purposes of subsection (1), where any amount of any dividend is denominated in any currency other than the currency of the Republic, that amount must be translated to the currency of the Republic by applying the spot rate applicable at the time that the dividend is paid.
(6) Where a-
(a) company that makes payment of a dividend to any person withholds an amount of dividends tax from that payment in terms of section 64G(1); or
(b) regulated intermediary that makes payment of a dividend to any person withholds an amount of dividends tax from that payment in terms of section 64H(1),
that company or regulated intermediary must, for the purposes of this Part, be deemed to have paid the amount so withheld to that person.
“STC credit” definition of section 64D of ITA
‘STC credit’ ……….
[Definition of “STC credit” deleted by section 60 of Act 23 of 2018 effective on 17 January 2019]
“Regulated intermediary” definition of section 64D of ITA
‘regulated intermediary’ means any-
(a) central securities depository participant contemplated in section 32 of the Financial Markets Act;
(b) authorised user as defined in section 1 of the Financial Markets Act;
(c) approved nominee contemplated in section 76(3) of the Financial Markets Act;
(d) nominee that holds investments on behalf of clients as contemplated in section 9.1 of Chapter 1 and section 8 of Chapter II of the Codes of Conduct for Administrative and Discretionary Financial Service Providers, 2003 (Board Notice 79 of 2003) published in Government Gazette No. 25299 of 8 August 2003;
(e) portfolio of a collective investment scheme in securities;
[Paragraph (e) amended by section 70 of Act 7 of 2010 effective on 1 April 2012 and section 73 of Act 25 of 2015 effective on 1 April 2015]
(f) transfer secretary that is a person other than a natural person and that has been approved by the Commissioner subject to such conditions and requirements as may be determined by the Commissioner; or
[Paragraph (f) inserted by section 70 of Act 7 of 2010 effective on 1 April 2012, amended by section 73 of Act 25 of 2015 effective on 1 April 2015]
(g) a portfolio of a hedge fund collective investment scheme.
[Paragraph (g) added by section 73 of Act 25 of 2015 and amended by section 60 of Act 17 of 2017 effective on 18 December 2017]