Category: PART VIII – Dividends Tax (ITA)

Section 64LA (ITA) – Refund in respect of dividends in specie

Posted on by admin_kmos

64LA.   Refund of tax in respect of dividends in specie

Notwithstanding the provisions of Chapter 13 of the Tax Administration Act, if-

(a)     dividends tax is paid by a company in respect of a dividend that consists of a distribution of an asset in specie as a result of the company being unable to obtain the declaration and written undertaking contemplated in section 64FA(1)(a) or (2) by the date contemplated in that section; and

(b)     both the declaration and the written undertaking are submitted to the company within three years after the date of payment of the dividend in respect of which they are made,

[Paragraph (b) substituted by section 6 of Act 13 of 2017 and by section 4 of Act 21 of 2021]

so much of the amount of dividends tax paid as would not have been payable had that declaration and written undertaking been submitted by the date contemplated in section 64FA(1)(a) or (2) is refundable to the company by SARS if claimed within three years of the date of payment of the tax.

[Section 64LA inserted by section 6 of Act 44 of 2014 effective on 20 January 2015]

“Dividend” definition of section 64D of ITA

Posted on by admin_kmos

“dividend” means any dividend or foreign dividend as defined in section 1, including any amount contemplated in section 31(3)(i), that is—

(a)       paid by a company that is a resident; or

(b)       paid by a foreign company –

(i)      if the share in respect of which that foreign dividend is paid is a listed share; and

(ii)     to the extent that that foreign dividend does not consist of a distribution of an asset in specie;

[Definition of “dividend” substituted by section 75(1) of Act 24 of 2011 and amended by section 60(a) of Act 23 of 2018 and by section 36(1) of Act 23 of 2020 deemed effective on 17 January, 2019]

“Regulated intermediary” definition of section 64D of ITA

Posted on by admin_kmos

‘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]

Section 64E (ITA) – Levy of tax

Posted on by admin_kmos

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 if that debt arises by virtue of any share held in that company by a person contemplated in subparagraph (i).

(b)     The amount of the dividend that is deemed to have been paid in terms of paragraph (a) must-

(i)      the market-related interest in respect of that loan or advance, less the amount of interest that is payable to that company in respect of that loan or advance for that year of assessment; or

(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

(bb)   nil.

(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.

Section 64EA (ITA) – Liability for tax

Posted on by admin_kmos

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]