64FA.  Exemption from and reduction of tax in respect of dividends in specie

(1)     Where a company declares and pays a dividend that consists of a distribution of an asset in specie, that dividend is exempt from the dividends tax to the extent that it constitutes a distribution of an asset in specie if-

(a)     the person to whom the payment is made has, before the dividend is paid, submitted to the company-

(i)      a declaration by the beneficial owner in such form as may be prescribed by the Commissioner that the portion of the dividend that constitutes a distribution of an asset in specie would, if that portion had not constituted a distribution of an asset in specie, have been exempt from the dividends tax in terms of section 64F or an agreement for the avoidance of double taxation; and

[Subparagraph (i) substituted by section 17 of Act 20 of 2022]

(ii)     a written undertaking in such form as may be prescribed by the Commissioner to forthwith inform the company in writing should the circumstances affecting the exemption applicable to the beneficial owner referred to in subparagraph (i) change or the beneficial owner cease to be a beneficial owner;

[Paragraph (a) amended by section 87(1)(a) of Act 22 of 2012 and by section 6(1)(a) of Act 33 of 2019]

(b)     the beneficial owner forms part of the same group of companies, as defined in section 41, as that company;

(c)     the dividend constitutes a disposal as contemplated in paragraph 51A of the Eighth Schedule; or

(d)     the dividend constitutes a disposal as contemplated in paragraph 67B(2) of the Eighth Schedule.

(2)     A company that declares and pays a dividend that consists of a distribution of an asset in specie is liable for the dividends tax at a reduced rate in respect of the portion of the dividend that constitutes the distribution of an asset in specie if the person to whom the payment is made has, before the dividend is paid, submitted to the company—

(a)     a declaration by the beneficial owner in such form as may be prescribed by the Commissioner that the portion of the dividend that constitutes a distribution of an asset in specie would, if that portion had not constituted a distribution of an asset in specie, have been subject to that reduced rate as a result of the application of an agreement for the avoidance of double taxation; and

(b)     a written undertaking in such form as may be prescribed by the Commissioner to forthwith inform the company in writing should the circumstances affecting the reduced rate applicable to the beneficial owner referred to in paragraph (a) change or the beneficial owner cease to be the beneficial owner.

[Sub­section (2) amended by section 6(1)(b) of Act 33 of 2019. Paragraph (b) substituted by section 87(1)(e) of Act 22 of 2012 deemed effective on 1 April, 2012]

(3)     A declaration and written undertaking submitted in terms of subsection (1)(a) or (2) are no longer valid after a period of five years from the date of the declaration, unless the company that is making the payment is subject to the provisions of-

(a)     the Financial Intelligence Centre Act, 2001 (Act 38 of 2001);

(b)     the Agreement Between the Government of the Republic of South Africa and the Government of the United States of America to improve International Tax Compliance and to Implement the US Foreign Account Tax Compliance Act; or

(c)     the regulations for purposes of paragraph (a) of the definition of “international tax standard” in section 1 of the Tax Administration Act,

with regard to the person to whom the payment is made and takes account of these provisions in monitoring the continued validity of the declaration.

[Subsection (3) added by section 6(1)(c) of Act 33 of 2019 effective on 1 July, 2020]