EXTERNAL FREQUENTLY ASKED QUESTIONS SECURITIES TRANSFER TAX

Transcription

1 EXTERNAL FREQUENTLY ASKED S SECURITIES TRANSFER TAX Revision: 1 Page 1 of 8

2 1 PURPOSE This document provides general information regarding Securities Transfer Tax (STT) to all taxpayers. It is not intended to be utilised as a legal definition/explanation. 2 SCOPE This document applies to taxpayers that require general information regarding STT, including the calculation and payment thereof. 3 REFERENCES 3.1 LEGISLATION TYPE OF REFERENCE REFERENCE Legislation and Rules Securities Transfer Tax Act No. 25 of 2007 administered by SARS: Securities Transfer Tax Administration Act No. 26 of 2007 Income Tax Act No. 58 of 1962: Sections 42, 44, 45, 46 and 47 Tax Administration Act No. 28 of 2011 (effective 1 October 2012) Other Legislation: Securities Services Act No. 36 of 2004: Section 34 Collective Investment Schemes Control Act No. 45 of 2002: Part IV International Instruments: None 3.2 CROSS REFERENCES DOCUMENT # DOCUMENT TITLE QUALITY REQUIREMENTS GEN-PAYM-11- External Guide - Securities Transfer Tax (STT) All G01 4 DEFINITIONS AND ACRONYMS CC Commissioner Company e-stt System FAQ Listed Security Member Participant Person SARS Close Corporation Commissioner for SARS Any corporation, or company incorporated, established or formed by or under any law Electronic Securities Transfer Tax system Frequently Asked Question Any security that is listed on an exchange Any person who is an authorised user as defined in section 1 of the Securities Services Act No. 36 of 2004, providing such security services as the rules of the exchange permit including services in respect of the buying and selling of a listed security A person that holds in custody and administers a listed security or an interest in a listed security and that has been accepted in terms of section 34 of the Securities Services Act No. 36 of 2004, by a central securities depository as a participant in that central securities depository 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 No. 45 of 2002 South African Revenue Service Revision: 1 Page 2 of 8

3 Security STT Transfer Unlisted Security means: (a) any share or depository receipt in a company; (b) any member s interest in a close corporation; or (c) any right or entitlement to receive any distribution from a company or close corporation, excluding the debt portion in respect of a share linked to a debenture Securities Transfer Tax 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 Any security other than a listed security 5 FREQUENTLY ASKED S 1. What is Securities Transfer Tax? It is a tax levied on every transfer of a security. A security in essence means any: Share in a company; Member s interest in a close corporation (CC); or Any right or entitlement to receive any distribution from a company or CC. Only the following securities are taxable: 2. Why was Securities Transfer Tax introduced? 3. What is the implementation date of Securities Transfer Tax? 4. What is the rate of Securities Transfer Tax? 5. What is the taxable amount on which Securities Transfer Tax is payable? Securities issued by companies incorporated, established or formed inside the Republic; and Securities issued by companies incorporated, established or formed outside the Republic, which are listed on an exchange. The Stamp Duties Act No. 77 of 1968, catered for unlisted securities whereas the Uncertificated Securities Tax Act No. 31 of 1998, catered for listed securities. The difference in events that gave rise to the tax payable resulted in anomalies and also complicated the administration of the tax or duties. In view of the above the Securities Transfer Tax Act No. 25 of 2007 (The Securities Transfer Tax Act) was introduced to replace the two Acts on securities with a single Act and tax in respect of any transfer of both listed and unlisted securities. The Securities Transfer Tax Act ensures that the rules governing both listed and unlisted securities are consistent. The Securities Transfer Tax Act came into operation on 1 July 2008 and applies to the transfer of listed and unlisted securities on or after 1 July The tax rate is 0,25% of the taxable amount of any security transferred. Purchase of listed securities through or from a member: The consideration for which the security is purchased. Revision: 1 Page 3 of 8

4 Transfer of listed securities by a participant or in any other manner: When the security is a share or depository receipt in a company: o The amount of the consideration for the security declared by the person who acquired that security; or o The closing price of the security where no consideration amount declared or the amount declared is less than the lowest price of that security. Where the security is a right or entitlement to receive any distribution from a company/cc the greater of: o The amount of consideration declared; or o The market value of the security on the date of acquisition. Transfer of unlisted securities: 6. Who is liable to pay Securities Transfer Tax? The amount or market value of the consideration given for the transfer of the security. Where there is no consideration given or the consideration is less than the market value of the security, the market value of the security. Where the security is cancelled or redeemed, the market value of that security immediately before the cancellation or redemption value must (market value must be determined as if the security was never cancelled/redeemed). Purchase of listed securities through or from a member: The member is liable for the payment of the tax to SARS. Transfer of listed securities effected by a participant: The participant is liable for the payment of the tax to SARS. Transfer of any other listed securities: The person to whom the listed security is transferred is liable for the tax payable. However, it must be paid through the member or participant holding the listed security in custody. 7. When is Securities Transfer Tax payable on the transfer of LISTED securities? 8. When is Securities Transfer Tax payable on the transfer of UNLISTED securities? Transfer of unlisted securities: The company which issued the unlisted security is liable for the payment of the tax to SARS. STT must be paid by the 14th day of the month following the month during which the transfers of the listed security occurred. STT must be paid within two months from the end of the month in which the unlisted security is transferred. 9. How is Securities Electronically via the SARS e- Securities Transfer Tax system. Revision: 1 Page 4 of 8

5 Transfer Tax payable? 10. Which exemptions apply? In the case of the transfer of listed securities, the member or participant must by the 14th day of the month following the month during which transfers took place, submit a declaration electronically (in the form and manner as the Commissioner may determine and containing the information prescribed by the Commissioner) stating the amount of Securities Transfer Tax payable. Revenue stamps or an impressed stamp may not be used to pay Securities Transfer Tax. The only method of payment will be electronically through the SARS e- Securities Transfer Tax system. STT is not payable in respect of transfer of a security under the following circumstances: To a person in terms of: i. an asset-for-share transaction referred to in section 42 of the Income Tax Act No 58 of 1962; ii. an amalgamation transaction referred to in section 44 of the Income Tax Act No 58 of 1962; iii. an intra-group transaction referred to in section 45 of the Income Tax Act No 58 of 1962; iv. an unbundling transaction referred to in section 46 of the Income Tax Act No 58 of 1962; v. a liquidation distribution referred to in section 47 of the Income Tax Act No 58 of 1962; or vi. any transaction which would have constituted a transaction or distribution referred to o in (i) to (v) above regardless of whether or not an election has been made for the purposes of the relevant section to apply; o (i) or (ii) regardless of the market value of the asset disposed of in exchange for that security; or o (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. 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 participant that the change is in terms of that lending arrangement; From a pension fund to another pension fund, both of which are registered under the Pension Funds Act No. 24 of 1956 and the change is made in pursuance of a scheme as referred to in section 14(1) of that Act; To a public benefit organisation which is exempt from income tax in terms of section 10(1)(cN) of the Income Tax Act No 58 of 1962, if the tax thereon would have been legally payable and borne by that public benefit organisation; Revision: 1 Page 5 of 8

6 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 No 58 of 1962, 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 have been legally payable and borne by that institution, board or body; Which is a participatory interest in a collective investment scheme regulated in terms of the Collective Investment Schemes Control Act No. 22 of 2008; To a beneficiary entitled thereto under a trust created in accordance with a will; To 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; To 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 before the date of that marriage; To a surviving or divorced spouse who acquires that security from his or her deceased or divorced spouse as a result of the death of his or her spouse or dissolution of their marriage or union; To any sphere of the Government of the Republic or to any sphere of the government of any other country; To any water services provider as defined in section 1 of the Income Tax Act; To any regional electricity distributor as defined in section 1 of the Income Tax Act; Which in terms of the Transfer Duty Act No. 40 of 1949 constitutes a transaction for the acquisition of property that is subject to transfer duty; Which is a share in a share block company as defined in section 1 of the Share Block Control Act No. 59 of 1980, which confers a right to or an interest in the use of immovable property; To any traditional council as defined in the Communal Land Rights Act No. 11 of 2004; or To a member who has purchased that security for the account and benefit of another person. 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 Revision: 1 Page 6 of 8

7 11. What is the notification requirement for the transfer of UNLISTED securities? 12. When will interest be charged? 13. When will penalty on default be charged? 14. Is interest or penalty recoverable by the person who paid it to SARS? 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. Any person to whom an unlisted security is transferred to must inform the company which issued that security of the transfer, within a period of 30 days from the date of the transfer. Where STT is not paid in full within the prescribed payment period, interest must be paid at the prescribed rate. The interest will be calculated on the balance of the tax outstanding from the day following the last relevant date for payment, to the actual date on which payment is made to SARS. Where any tax remains unpaid after the last relevant date for payment, a penalty of 10% of the unpaid tax becomes payable to SARS. The Commissioner may, having regard to the circumstances of the case, remit the penalty or a portion of it. Listed securities: A member or participant may recover the amount of interest or penalty payable to SARS from the person to whom the listed security is transferred to or cancels or redeems the listed security, to the extent that the action of that person resulted in the interest or penalty. Unlisted securities: 15. What must I do to get a refund on an overpayment of Securities Transfer Tax? 16. For what period must records be kept? 17. Where can I get more information on Securities Transfer Tax legislation? The company which issued the security may recover the amount of the interest or penalty payable to SARS from the person to whom the security is transferred, to the extent the action of that person resulted in the interest or penalty. Applications for refunds must be submitted via one of the following options: At a SARS branch, by placing all required documents in the drop-box available; Electronically to the following address: mailto:stt@sars.gov.za; or Via efiling. Any company which issued unlisted securities and any member/participant/person to which a listed security is transferred, must keep for a period of five years records of every transfer. This is to enable them to meet the requirements of the Securities Transfer Tax Administration Act No. 26 of 2007 and to enable the Commissioner to be satisfied that those requirements have been met. Securities Transfer Tax Act No. 25 of 2007 Securities Transfer Tax Administration Act No. 26 of 2007 Explanatory Memorandum on the Securities Transfer Tax Bill Explanatory Memorandum on the Securities Transfer Tax Administration Bill Revision: 1 Page 7 of 8

8 Section 27 of the Taxation Laws Second Amendment Act of Where can I get more information on the SARS e Securities Transfer Tax system? Section 73 of the Taxation Laws Amendment Act 2008 SARS Contact Centre on SARS (7277). 6 DOCUMENT MANAGEMENT Designation Name / Division Business Owner: Group Executive: Centralised Processing Operations Policy Owner: Executive: Enterprise Business Enablement Author: S Matimba Detail of change from previous revision: Q code updated from FIN-CH-11-G1-FAQ1 to and updated legislation with TAA (effective 1 October 2012) Template number and revision POL-TM-07 - Rev 3 Revision: 1 Page 8 of 8