Reproduced under Goverment Printer’s Authorisation (Authorisation No. 11817) dated 30 August 2019.

Please remember to periodically “Check for Updates”!

SECURITIES TRANSFER TAX ACT 25 OF 2007

(English text signed by the President)

[Assented to: 21 December 2007]

[Commencement date: 1 July 2008]

as amended by:

Taxation Laws Amendment Act 3 of 2008

Revenue Laws Amendment Act 60 of 2008

Taxation Laws Amendment Act 17 of 2009

Taxation Laws Second Amendment Act 18 of 2009

Taxation Laws Amendment Act 7 of 2010

Taxation Laws Amendment Act 24 of 2011

Taxation Laws Amendment Act 22 of 2012

Taxation Laws Amendment Act 31 of 2013

Tax Administration Laws Amendment Act 39 of 2013

Taxation Laws Amendment Act 43 of 2014

Taxation Laws Amendment Act 25 of 2015

Taxation Laws Amendment Act 15 of 2016

Taxation Laws Amendment Act 17 of 2017

Taxation Laws Amendment Act 23 of 2020

Taxation Laws Amendment Act 20 of 2021

To report an issue, please contact us at service@hApp-e-tax.co.za

ACT

To provide for the levying of a securities transfer tax in respect of every transfer of any security; and to provide for matters connected therewith.

BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:-

ARRANGEMENT OF SECTIONS

Section 1 – Definitions

Section 2 – Imposition of tax

Section 3 – Purchase of listed securities through or from member

Section 4 – Transfer of listed securities effected by participant

Section 5 – Other transfers of listed securities

Section 6 – Transfer of unlisted securities

Section 7 – Tax recoverable from person to whom security is transferred

Section 8 – Exemptions

Section 8A – Sharia compliant financing arrangements

Section 9 – Schemes for obtaining undue tax benefits

Section 10 – Effect of certain exemptions from taxes

Section 11 – Repeal of Act

Section 12 – Short title and commencement

1. Definitions

In this Act, unless the context indicates otherwise –

“bank restricted stock account” means a bank restricted stock account as defined in the exchange rules;

[Definition of “bank restricted stock account” inserted by section 153 of Act 22 of 2012 effective on 1 January 2013]

“close corporation” means a “corporation” as defined in section 1 of the Close Corporation Act, 1984 (Act No. 69 of 1984);

“closing price” means the closing price, on the date of the transaction or other manner of acquisition of a listed security, at which that security was traded on the exchange on which it is listed, as determined by that exchange on each day on which trade in that security occurs on that exchange: Provided that where the security was not traded on the date of the transaction or other manner of acquisition, the closing price of that security must be regarded as being the closing price on the last business day, preceding the date of the transaction or other manner of acquisition, on which that security was traded on that exchange;

“collateral arrangement” means any arrangement in terms of which-

(a)     a person (hereafter the transferor) transfers a listed share or any bond issued by the government of the Republic in the national or local sphere or any sphere of government of any country other than the Republic if that bond is listed on a recognised exchange as defined in paragraph 1 of the Eighth Schedule to the Income Tax Act to another person (hereafter the transferee) for the purposes of providing security in respect of an amount owed by the transferor to the transferee;

(b)     the transferor can demonstrate that the arrangement was not entered into for the purposes of the avoidance of tax and was not entered into for the purposes of keeping any position open for more than 24 months;

(c)     that transferee in return contractually agrees in writing to deliver an identical share, as defined in section 1 of the Income Tax Act, or any bond issued by the government of the Republic in the national or local sphere or any sphere of government of any country other than the Republic that is listed on a recognised exchange as defined in paragraph 1 of the Eighth Schedule to the Income Tax Act to that transferor within a period of 24 months from the date of transfer of that listed share or bond from the transferor to the transferee;

(d)     that transferee is contractually required to compensate that transferor for any distributions in respect of the listed share (or any other share that is substituted for that listed share in terms of an arrangement that is announced and released as a corporate action as contemplated in the JSE Limited Listings Requirements in the SENS (Stock Exchange News Service) as defined in the JSE Limited Listings Requirements) or a corporate action as contemplated in the listings requirements of any other exchange, licenced under the Financial Markets Act, that are substantially the same as the requirements prescribed by the JSE Limited Listings Requirements, where that corporate action complies with the applicable requirements of that exchange or any bond issued by the government of the Republic in the national or local sphere or any sphere of government of any country other than the Republic that is listed on a recognised exchange as defined in paragraph 1 of the Eighth Schedule to the Income Tax Act, which that transferor would have been entitled to receive during that period had that arrangement not been entered into; and

[Paragraph(d) substituted by section 76(a) of Act 34 of 2019]

(e)     that arrangement does not affect the transferor’s benefits or risks arising from fluctuations in the market value of that listed share (or any other share that is substituted for that listed share in terms of an arrangement that is announced and released as a corporate action as contemplated in the JSE Limited Listings Requirements in the SENS (Stock Exchange News Service) as defined in the JSE Limited Listings Requirements) or a corporate action as contemplated in the listings requirements of any other exchange, licenced under the Financial Markets Act, that are substantially the same as the requirements prescribed by the JSE Limited Listings Requirements, where that corporate action complies with the applicable requirements of that exchange or any bond issued by the government of the Republic in the national or local sphere or any sphere of government of any country other than the Republic that is listed on a recognised exchange as defined in paragraph 1 of the Eighth Schedule to the Income Tax Act,

[Paragraph(e) substituted by section 76(a) of Act 34 of 2019]

but does not include an arrangement where the transferee-

(i)      has not transferred the identical share or bond contemplated in paragraph (b) to the transferor within the period referred to in that paragraph unless such failure to return such identical share or bond is due to an arrangement that is announced and released as a corporate action as contemplated in the JSE Limited Listings Requirements in the SENS (Stock Exchange News Service) as defined in the JSE Limited Listings Requirements or a corporate action as contemplated in the listings requirements of any other exchange, licenced under the Financial Markets Act, that are substantially the same as the requirements prescribed by the JSE Limited Listings Requirements, where that corporate action complies with the applicable requirements of that exchange; or

(ii)     has subsequently transferred the listed share or bond contemplated in paragraph (a), in a manner other than a transfer contemplated in paragraphs (a) to (e), unless the listed share or bond is transferred for purposes of-

(aa)   a repurchase agreement entered into with the South African Reserve Bank as contemplated in section 10(1)(j) of the South African Reserve Bank Act, 1989 (Act 90 of 1989);

(bb)   complying with Regulation 28 of the Pension Funds Act, 1956 (Act 24 of 1956); or

(cc)   securing overnight cash placement in order to comply with the Basel III Supervisory Framework for measuring and controlling large exposures;

[Definition of “collateral arrangement” inserted by section 137(1)(a) of Act 25 of 2015, substituted by section 90(1)(a) of Act 15 of 2016 and by section 90(1)(a) of Act 17 of 2017 and amended by section 76(b) of Act 34 of 2019 and by section 56(1) of Act 20 of 2021 with effect from 1 January, 2023 and applicable in respect of any collateral arrangements entered into on or after that date]

“Commissioner” means the Commissioner for the South African Revenue Service;

“company” means any corporation, or company incorporated, established or formed by or under any law;

“exchange” means an “exchange” as defined in section 1 of the Financial Markets Act and licensed under section 9 of that Act;

[Definition of “exchange” substituted by section 110 of Act 43 of 2014 effective on 3 June 2013]

“exchange rules” means the exchange rules as defined in section 1 of the Financial Markets Act or an exchange directive contemplated in section 17(2)(z) of that Act;

[Definition of “exchange rules” inserted by section 153 of Act 22 of 2012 effective on 1 January 2013 and substituted by section 110 of Act 43 of 2014 effective on 3 June 2013]

“Financial Markets Act” means the Financial Markets Act, 2012 (Act No. 19 of 2012);

[Definition of “Financial Markets Act” inserted by section 110 of Act 43 of 2014 effective on 3 June 2013]

“general restricted stock account” means a general restricted stock account as defined in the exchange rules;

[Definition of “general restricted stock account” inserted by section 153 of Act 22 of 2012 effective on 1 January 2013]

“Income Tax Act” means the Income Tax Act, 1962 (Act No. 58 of 1962);

“lending arrangement” means any arrangement in terms of which-

(a)     a person (hereinafter referred to as the lender) lends a listed security or any bond issued by the government of the Republic in the national or local sphere or any sphere of government of any country other than the Republic if that bond is listed on a recognised exchange as defined in paragraph 1 of the Eighth Schedule to the Income Tax Act to another person (hereinafter referred to as the borrower) in order to enable that borrower to effect delivery (other than to any lender in relation to that borrower, unless the borrower can demonstrate that the arrangement was not entered into for the purposes of the avoidance of tax and was not entered into for the purposes of keeping any position open for more than 12 months) of that security or bond within 10 business days after the date of transfer of that security from the lender to the borrower in terms of that arrangement;

(b)     that borrower in return contractually agrees in writing to deliver an identical security or any bond issued by the government of the Republic in the national or local sphere or any sphere of government of any country other than the Republic if that bond is listed on a recognised exchange as defined in paragraph 1 of the Eighth Schedule to the Income Tax Act, as defined in section 1 of the Income Tax Act, to that lender within a period of 12 months from the date of transfer of that listed security or bond from the lender to the borrower;

(c)     that borrower is contractually required to compensate that lender for any distributions in respect of the listed security (or any other security that is substituted for that listed security in terms of an arrangement that is announced and released as a corporate action as contemplated in the JSE Limited Listings Requirements in the SENS (Stock Exchange News Service) as defined in the JSE Limited Listings Requirements) or any bond issued by the government of the Republic in the national or local sphere or any sphere of government of any country other than the Republic if that bond is listed on a recognised exchange as defined in paragraph 1 of the Eighth Schedule to the Income Tax Act which that lender would have been entitled to receive during that period had that arrangement not been entered into; and

[Paragraph (c) substituted by section 67(a) of Act 23 of 2020]

(d)     that arrangement does not affect the lender’s benefits or risks arising from fluctuations in the market value of the listed security (or any other security that is substituted for that listed security in terms of an arrangement that is announced and released as a corporate action as contemplated in the JSE Limited Listings Requirements in the Stock Exchange News Service as defined in the JSE Limited Listings Requirements) or any bond issued by the government of the Republic in the national or local sphere or any sphere of government of any country other than the Republic if that bond is listed on a recognised exchange as defined in paragraph 1 of the Eighth Schedule to the Income Tax Act,

[Paragraph (d) substituted by section 67(a) of Act 23 of 2020]

but does not include an arrangement where the borrower has not-

(i)     on-delivered the listed security or bond within the period referred to in paragraph (a); or

(ii)     returned the identical security or bond contemplated in paragraph (b) to the lender within the period referred to in that paragraph other than if such failure to return such identical security or bond is due to an arrangement that is announced and released as a corporate action as contemplated in the JSE Limited Listings Requirements in the Stock Exchange News Service as defined in the JSE Limited Listings Requirements;

[Paragraph (ii) substituted by section 67(b) of Act 23 of 2020]

[Definition of “lending arrangement” substituted by section 90 of Act 15 of 2016 and section 90 of Act 17 of 2017 effective on 1 January 2018 and applies in respect of collateral arrangements and lending arrangements entered into on or after that date]

“listed security” means any security that is listed on an exchange;

“listed share” means any share or depository receipt in a company that is listed on an exchange;

[Definition of “listed share” inserted by section 137 of Act 25 of 2015 effective on 8 January 2016]

“lowest price” means the lowest price, on the date of the transaction or other manner of acquisition of a listed security, at which that security was traded on the exchange on which it is listed, as determined by that exchange on each day on which trade in that security occurs on that exchange: Provided that where that security was not traded on the date of the transaction or other manner of acquisition, the lowest price of that security must be regarded as being the lowest price on the last business day, preceding the date of the transaction or other manner of acquisition, on which that security was traded on that exchange;

“member” means any person who is an ‘authorised user’ as defined in section 1 of the  Financial Markets Act providing such security services as the rules of the exchange permit including services in respect of the buying and selling of a listed security;

[Definition of “member” substituted by section 110 of Act 43 of 2014 effective on 3 June 2013]

“Minister” means the Minister of Finance;

“participant” means a person that holds in custody and administers a listed security or an interest in a listed security and that has been authorised in accordance with section 31 of the Financial Markets Act by a central securities depository as a participant in that central securities depository;

[Definition of “participant” substituted by section 110 of Act 43 of 2014 effective on 3 June 2013]

“person” includes –

(a)     any sphere of the Government of the Republic;

(b)     any body of persons (incorporated or unincorporated);

(c)     the estate of any deceased or insolvent person;

(d)     any trust fund; and

(e)     any portfolio comprised in any collective investment scheme in securities contemplated in Part IV of the Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002);

“prescribed rate”, in relation to any interest payable in terms of the Securities Transfer Tax Administration Act, 2007, means such rate as the Minister may fix from time to time by notice in the Gazette in terms of section 80(1)(b) of the Public Finance Management Act, 1999 (Act No. 1 of 1999): Provided that where the Minister fixes a new rate in terms of that Act, that new rate applies for the purposes of the Securities Transfer Tax Administration Act, 2007, from the first day of the second month following the date on which that new rate came into operation;

“Republic” means the “Republic” as defined in section 1 of the Income Tax Act;

“security” means –

(a)     any share or depository receipt in a company; or

[Paragraph (a) amended by section 145 of Act 24 of 2011 effective on 1 April 2012]

(b)     any member’s interest in a close corporation,

[Paragraph (b) amended by section 145 of Act 24 of 2011 effective on 1 April 2012]

(c)     ……….

[Paragraph (c) deleted by section 145 of Act 24 of 2011 effective on 1 April 2012]

excluding the debt portion in respect of a share linked to a debenture;

“tax” means the tax payable in terms of this Act;

“transfer” includes the transfer, sale, assignment or cession, or disposal in any other manner, of a security or the cancellation or redemption of that security, but does not include –

(a)     any event that does not result in a change in beneficial ownership;

(b)     any issue of a security; or

(c)     a cancellation or redemption of a security if the company which issued the security is being wound up, liquidated or deregistered or its corporate existence is being finally terminated;

“unlisted security” means any security other than a listed security;

[Definition of “unlisted security” amended by section 153 of Act 22 of 2012 effective on 1 January 2013]

“unrestricted and security restricted stock account” means an unrestricted and security restricted stock account as defined in the exchange rules.

[Definition of “unrestricted and security restricted stock account” amended by section 153 of Act 22 of 2012 effective on 1 January 2013]

2.  Imposition of tax

 

(1)     There must be levied and paid for the benefit of the National Revenue Fund a tax, to be known as the securities transfer tax, in respect of-

 

(a)        every transfer of any security issued by-

(i)      a close corporation or company incorporated, established or formed inside the Republic; or

(ii)     a company incorporated, established or formed outside the Repub­lic and listed on an exchange; and

(b)     any reallocation of securities from a member’s bank restricted stock account or a member’s unrestricted and security restricted stock account to a member’s general restricted stock account,

at the rate of 0,25 per cent of the taxable amount of that security determined in terms of this Act.

[Subsection (1) substituted by section 154 of Act 22 of 2012 effective on 1 January 2013]

 

(2)     The Minister of Finance may announce in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, 1999 (Act No. 1 of 1999), that, with effect from the date mentioned in that announcement-

 

(a)     the rate of securities transfer tax referred to in subsection (1) is altered to the extent mentioned in the announcement; or

(b)     there is a change in the provisions of this Act to the effect that the transfer of any security is no longer subjected to securities transfer tax.

[Subsection (2) substituted by section 91 of Act 15 of 2016 effective on19 January 2017]

 

(3)     If the Minister makes an announcement referred to in subsection (2), that alteration comes into effect on the date announced 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 (3) substituted by section 60 of Act 18 of 2009 and section 91 of Act 15 of 2016 effective on19 January 2017]

3.  Purchase of listed securities through or from member

(1)     The taxable amount in respect of any transfer as a result of every purchase of a listed security through the agency of or from a member is the consideration for which that security is so purchased.

(2)     The member is liable for the tax payable in respect of a transfer of a listed security referred to in this section.

4.  Transfer of listed securities effected by participant

 

(1)     Unless tax is payable on a transfer contemplated in section 3, the taxable amount in respect of any transfer of a listed security effected by a participant is –

 

(a)     where that security is a security referred to in paragraph (a) of the definition of “security” –

(i)      the amount of the consideration for that security declared by the person who acquires that security; or

(ii)     if no amount of consideration referred to in subparagraph (i) is declared, or if the amount so declared is less than the lowest price of that security, the closing price of that security.

[Subparagraph  (ii) amended by section 146 of Act 24 of 2011 effective on 1 April 2012]

(b)     ……….

[Paragraph (b) deleted by section 146 of Act 24 of 2012 effective on 1 April 2012]

 

(2)     The participant is liable for the tax payable in respect of the transfer of a security referred to in this section.

5.  Other transfers of listed securities

 

(1)     Unless tax is payable on a transfer contemplated in section 3 or 4, the taxable amount in respect of any transfer of a listed security is –

 

(a)     where that security is a security referred to in paragraph (a) of the definition of “security”-

(i)      the amount of the consideration for that security declared by the person who acquires that security; or

(ii)     if no amount of consideration referred to in subparagraph (i) is declared, or if the amount so declared is less than the lowest price of the security, the closing price of that security.

[Subparagraph  (ii) amended by section 147 of Act 24 of 2011 effective on 1 April 2012]

(b)     ……….

[Paragraph  (b) deleted by section 147 of Act 24 of 2012 effective on 1 April 2012]

 

(2)     The person to whom the listed security is transferred is liable for the tax payable as referred to in this section.

 

(3)     Tax payable in terms of subsection (2) must be paid through the member or participant holding the listed security in custody or, in the case where the listed security is not held in custody by either a member or participant, through the company that issued the listed security.

[Subsection (3) substituted by section 126 of Act 60 of 2008 effective on 1 Jul 2008]

6. Transfer of unlisted securities

(1)     The taxable amount in respect of every transfer of an unlisted security is –

(a)     the amount or market value of the consideration given or, where no consideration is given or the consideration given is less than the market value of that security, the market value of that security; and

(b)     in the case of the cancellation or redemption of an unlisted security, the market value of that security immediately prior to the cancellation or redemption: Provided that the market value must be determined as if that security was never cancelled or redeemed.

(2)     The company which issued the unlisted security is liable for the tax payable in respect of any transfer of that unlisted security.

7.  Tax recoverable from person to whom security is transferred

(1)     In the case of a listed security, a member or participant may recover the amount of the tax payable by that member or participant in respect of the transfer of that security from the person –

(a)     to whom that security is transferred; or

(b)     that cancels or redeems that security.

(2)     In the case of an unlisted security, the company which issued that security may recover the amount of tax payable by that company in respect of the transfer of that security from the person to whom that security is transferred.

8.  Exemptions

(1)     The tax is not payable in respect of a transfer of a security –

(a)     if the security is transferred to a person –

(i)      in terms of an asset-for-share transaction referred to in section 42 of the Income Tax Act;

(iA)   in terms of a substitutive share-for-share transaction referred to in section 43 of the Income Tax Act or in terms of paragraph 11(2)(l) of the Eighth Schedule to the Income Tax Act;

[Subparagraph  (iA) inserted by section 183 of Act 31 of 2013 effective on 4 July 2013]

(ii)     in terms of an amalgamation transaction referred to in section 44 of the Income Tax Act;

(iii)    in terms of an intra-group transaction referred to in section 45 of the Income Tax Act;

(iv)    in terms of an unbundling transaction referred to in section 46 of the Income Tax Act;

(v)     in terms of a liquidation distribution referred to in section 47 of the Income Tax Act; or

(vi)    in terms of any transaction which would have constituted a transaction or distribution referred to –

(A)    ………..

[Item (A) substituted by section 73 of Act 3 of 2008 and section 97 of Act 17 of 2009 and deleted by section 127 of Act 7 of 2010 effective on 1 January 2009]

(B)    in subparagraph (i) or (ii) regardless of the market value of the asset disposed of in exchange for that security; or

[Item (B) substituted by section 127 of Act 60 of 2008 effective on 1 Jan 2009]

(C)    in subparagraphs (i) to (v) regardless of whether or not that person acquired that security as a capital asset or as trading stock,

where the public officer of the relevant company has made a sworn affidavit or solemn declaration that the acquisition of that security complies with the provisions of this paragraph;

(b)     if the transfer is from a lender to a borrower, or vice versa, in terms of a lending arrangement and the person to whom that security has been transferred has certified to the member or participant that the change is in terms of that lending arrangement;

[Paragraph  (b) substituted by section 138 of Act 25 of 2015 effective on 1 January 2016]

(c)     if the transfer is from a pension fund to another pension fund both of which are registered under the Pension Funds Act, 1956 (Act No. 24 of 1956), and that change is made in pursuance of a scheme referred to in section 14(1) of that Act;

(d)     if that security is transferred to a public benefit organisation which is exempt from income tax in terms of section 10(1)(cN) of the Income Tax Act, if the tax thereon would, but for this exemption, be legally payable and borne by that public benefit organisation;

[Paragraph (d) substituted by section 57 of Act 20 of 2021 effective on 19 January, 2022]

(e)     if that security is transferred to an institution, board or body, which is exempt from income tax in terms of section 10(1)(cA)(i) of the Income Tax Act, and which has as its sole or principal object the carrying on of any public benefit activity referred to in section 30 of that Act, if the tax thereon would be legally payable and borne by that institution, board or body;

(f)     to the extent that that security is a participatory interest in a collective investment scheme regulated in terms of the Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002);

(g)     if that security is transferred to a beneficiary entitled thereto under a trust created in accordance with a will;

(h)     if the person to whom that security is transferred is an heir or a legatee who has acquired that security ab intestatio or by way of testamentary succession or as a result of a redistribution of the assets of a deceased estate in the process of liquidation;

(i)      if the person to whom that security is transferred is a spouse in a marriage in community of property who acquires an undivided half-share in that security by operation of law by virtue of the contraction of such marriage, if that security was acquired by the other spouse prior to the date of that marriage;

(j)      if the person to whom that security is transferred is a surviving or divorced spouse who acquires a security from his or her deceased or divorced spouse where that security is transferred to that surviving or divorced spouse as a result of the death of his or her spouse or dissolution of their marriage or union;

(k)     transferred to any sphere of the Government of the Republic or to any sphere of the government of any other country;

(l)      transferred to any “water services provider” as defined in section 1 of the Income Tax Act;

(m)    ……….

[Paragraph (m) deleted by section 148 of Act 24 of 2011 effective on 10 January 2012]

(n)     if that security is an unlisted security which in terms of the Transfer Duty Act, 1949 (Act 40 of 1949), constitutes a transaction for the acquisition of property that is subject to transfer duty or constitutes a supply of goods that is subject to value-added tax under the Value-Added Tax Act, 1991 (Act 89 of 1991);

[Paragraph(n) substituted by section 77(a) of Act 34 of 2019]

(o). . . . . .

[Paragraph(o) deleted by section 77(b) of Act 34 of 2019]

(p)     transferred to any traditional council as referred to in the Communal Land Rights Act, 2004 (Act No. 11 of 2004), on or before a date that may be determined by the Minister by notice in the Gazette;

[Paragraph (p) amended by section 127 of Act 60 of 2008 effective on 1 Jan 2009]

(q)     if the person to whom that security is transferred is a member who acquires that security and allocates it to that member’s bank restricted stock account or that member’s unrestricted and security restricted stock account; or

[Paragraph (q) amended by section 127 of Act 60 of 2008 effective on 1 Jan 2009, substituted by section 148 of Act 24 of 2011 effective on 1 January 2011, section 155(a) of Act 22 of 2012 effective on 1 July 2008 and section 155 (b) of Act 22 of 2012 effective on 1 January 2013]

(r)      if that security was transferred during a month in respect of which-

(i)      in the case of an unlisted security, the company which issued that security; or

(ii)     in the case of a listed security, the relevant member, relevant participant or the company that issued that security where that security is not held in custody by either a member or a participant,

would have had to pay tax of less than R100 to the Commissioner;

[Paragraph  (r) amended by section 127 of Act 60 of 2008 effective on 1 January 2009, section 155 of Act 22 of 2012 effective on 1 January 2011 and section 155 of Act 22 of 2012 effective on 1 Apri 2013]

(s)     if that security constitutes a share in a headquarter company as defined in section 1 of the Income Tax Act, 1962 (Act No. 58 of 1962); or

[Paragraph (s) added by section 155 of Act 22 of 2012 effective on 1 January 2011 and amended by section 155 of Act 22 of 2012 effective on 1 April 2013]

(t)      if that security constitutes a share in a REIT as defined in section 1 of the Income Tax Act;

[Paragraph (t) added by section 155 of Act 22 of 2012 effective on 1 April 2013 and amended by section 138 of Act 25 of 2015 effective on 1 January 2016]

(u)     if the transfer is from a transferor to a transferee, or vice versa, in terms of a collateral arrangement and the person to whom that security has been transferred has certified to the member or participant that the change is in terms of that collateral arrangement; or

[Paragraph (u) added by section 138(1)(c) of Act 25 of 2015 and amended by section 77(c) of Act 34 of 2019]

(v)     if that security is transferred to a bank, if that bank is not resident in the Republic and is entrusted by the Government of a territory outside the Republic with the custody of the principal foreign exchange reserves of that territory;

[Paragraph (v) added by section 77(c) of Act 34 of 2019 and amended by section 68 of Act 23 of 2020]

(w)    if that security is transferred to any multinational organisation providing foreign donor funding in terms of an official development assistance agreement that is binding in terms of section 231(3) of the Constitution of the Republic of South Africa Act, 1996, to the extent—

(i)      the security is transferred pursuant to the organisation supplying goods or rendering services in relation to projects that are approved by the Minister; or

(ii)     that agreement provides that the transfer of that security to that organisation must be exempt; or

[Paragraph (w) added by section 68 of Act 23 of 2020]

(x)     if that security is transferred to-

(i)      African Development Bank established on 10 September 1964;

(ii)     World Bank established on 27 December 1945 including the International Bank for Reconstruction and Development and International Development Association;

(iii)    International Monetary Fund established on 27 December 1945;

(iv)    African Import and Export Bank established on 8 May 1993;

(v)     European Investment Bank established on 1 January 1958 under the Treaty of Rome; or

(vi)    New Development Bank established on 15 July 2014.

[Paragraph (x) added by section 68 of Act 23 of 2020]

(2)     The Commissioner may for the purposes of this section prescribe any declaration to be submitted by any person to the participant or member in respect of any security referred to in subsection (1).

[Subsection (2) substituted by section 15 of Act 22 of 2018]

(3)     No exemption referred to in subsection (1) applies in respect of any transfer of the security referred to in that subsection, unless there is lodged with a participant or member a declaration referred to in subsection (2) in respect of that security.

[Subsection (3) substituted by section 15 of Act 22 of 2018]

8A.      Sharia compliant financing arrangements

(1)     In the case of any murabaha as defined in section 24JA(1) of the Income Tax Act, 1962 (Act No. 58 of 1962)-

(a)     the financier shall be deemed not to have acquired any beneficial ownership of the security under the sharia arrangement; and

(b)     the client shall be deemed to have acquired beneficial ownership of the security from the seller-

(i)      for an amount equal to the consideration paid by the financier to the seller; and

(ii)     at such time as the financier acquired the beneficial ownership of the security from the seller by virtue of the transaction between the seller and the financier.

[Section 8A inserted by section 128 of Act 7 of 2010 effective on 1 January 2013 and substituted by section 149 of Act 24 of 2011 effective on 1 January 2013]

9.  Schemes for obtaining undue tax benefits

(1)     Notwithstanding any other provision of this Act, whenever the Commissioner is satisfied that any transaction, operation, scheme or understanding (whether enforceable or not), including all steps by which it is carried into effect –

(a)     has been entered into or carried out which has the effect of any person obtaining a tax benefit;

(b)     having regard to the substance of the transaction, operation, scheme or understanding –

(i)      was entered into or carried out in a manner which would not normally be employed for bona fide business purposes other than the obtaining of a tax benefit; or

(ii)     has created rights or obligations which would not normally be created between persons dealing at arm’s length; and

(c)     was entered into or carried out solely or mainly for the purposes of obtaining a tax benefit,

the Commissioner must determine the liability for tax, penalties and interest imposed by this Act and the Securities Transfer Tax Administration Act, 2007, and the amount thereof, as if the transaction, operation, scheme or understanding had not been entered into or carried out, or in the manner that the Commissioner in the circumstances of the case deems appropriate for the prevention or diminution of that tax benefit.

(2)     For the purposes of this section “tax benefit” means –

(a)     any reduction in the liability of any person to pay tax;

(b)     any increase in the entitlement of any person to the refund of tax; or

(c)     any other avoidance or postponement of liability for the payment of tax.

(3)     Any decision of the Commissioner under subsection (1) is subject to objection and appeal in accordance with Chapter 9 of the Tax Administration Act, 2011 (Act No. 28 of 2011), and   whenever in proceedings relating thereto it is proved that the relevant transaction, operation, scheme or understanding results or would result in a tax benefit, it is presumed, until the contrary is proved, that that scheme was entered into or carried out solely or mainly for the purpose of obtaining a tax benefit.

[Subsection (3) substituted by section 26 of Act 39 of 2013 effective on 16 January 2014]

10.  Effect of certain exemptions from taxes

No provision contained in any other law, other than a provision contained in any international agreement contemplated in section 231 of the Constitution, providing for an exemption from any tax shall be construed as applying or referring to the tax payable in terms of this Act.

[Section 10 substituted by section 69 of Act 23 of 2020]

11.  Repeal of Act

(1)     The Uncertificated Securities Tax Act, 1998 (Act No. 31 of 1998), is hereby repealed.

(2)     Notwithstanding subsection (1), the provisions of the Uncertificated Securities Tax Act, 1998 (Act No. 31 of 1998), continue to apply in respect of any change in beneficial ownership in any security before the date of the repeal of that Act as if that Act had not been so repealed.

12.  Short title and commencement

This Act is called the Securities Transfer Tax Act, 2007, and comes into operation on 1 July 2008.