February 2014 2013 edition nb1404 By Costa Divaris The Rise & Fall of the STC
The Rise & Fall of the STC The historical development & demise of the secondary tax on companies By Costa Divaris FEBRUARY 2014 2013 ed
By Costa Divaris 2014 Gauteng South Africa User rights This work is made available subject to the author s and publisher s copyright and nonexclusive user rights granted to you to use it solely for your personal or professional purposes and not to distribute it in any form. Electronic version The electronic version of this work is available by way of e-mail or hyperlink in the form of a PDF file. By supplying the publisher with your e-mail address, you agree to receive e-mail notifications of forthcoming seminars, publications and related offers from BSP Seminars. To unsubscribe at any time, send an e-mail with the subject No more e-mail to lesley@bspseminars.co.za. Should you be a subscriber, such an e-mail will also terminate your free subscription to the Tax Shock, Horror newsletter. Further copies This work is ordinarily available only in electronic format. Should you require a further or printed and bound copy of this work, please contact the publisher. Provenance, edition & product number Product number in the BSP Seminars Store of this 2013 edition: nb1403. Disclaimer This work is not intended to constitute advice on the topics covered. The views expressed are those of the author and publisher. While reasonable care has been taken to ensure the accuracy of this publication, the author and publisher expressly disclaim all and any liability to any person relating to anything done or omitted to be done or to the consequences thereof in reliance upon this work, and do not accept responsibility for any loss or damage that may be sustained as a result of reliance by any person on the information contained herein. In particular, anyone who may be affected by statutory provisions dealt with in this work is strongly advised to refer to the relevant Government Gazette as originally published. Copyright 2014 Costa Divaris/The Electronic Publishing Corp CC (referred to here as the author and the publisher respectively) Gauteng South Africa. This work is copyright under the Berne Convention. In terms of the Copyright Act 98 of 1978 no part of this work may be reproduced or transmitted in any form or by any means, presently known or that may be devised, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from the publisher. BSP Seminars, Knowledge in Business and Law Lookup are registered trade marks. Publisher The Electronic Publishing Corp CC (C Divaris) Bsp Seminars is a division of The Electronic Publishing Corp cc. 12 Eshowe Street Paulshof Extension 10. Telephone 011 234 2434. Fax-to-e-mail 086 515 0955. Postnet Suite 72 Private Bag X87 Bryanston 2021. Business Manager: Lesley Byrne. Contact Lesley Byrne: 082 854 2238 lesley@bspseminars.co.za. Contact Costa Divaris: Mobile 083 677 3333 cdivaris@icon.co.za Subscribe free to the Tax Shock, Horror newsletter the law journal in drag. Subscribe to the Bsp Seminars Subscription Service and attend all Bsp Seminars seminars and receive all of its new publications as these are published, receive the Tax Shock, Horror Database monthly, the Bsp Seminars Subscription Service Database at intervals, the Tax Administration Weekly, and enjoy a half-hour of free advice each month. Visit www.bspseminars.co.za. ISBN 978-0-928221-00-8 4 February 2014 Bsp Seminars
Contents For users of the electronic version of this Lookup: Click on the contents to go to a particular subject or page. Also use the bookmarks at the left to navigate the document. The Rise & Fall of the STC... 3 The historical development & demise of the secondary tax on companies... 3 Contents... 5 Table Of Contents... 9 Click-through Consolidated Text... 11 Main body of the Income Tax Act... 11 The Secondary Tax On Companies... 15 After all amendments... 15 Section 64B... 15 Definitions... 15 Section 64B(1)... 15 Declared... 16 Dividend cycle... 16 Group of companies...18 Profit... 18 Actual dividends... 19 Section 64B(2)... 19 Net amount of dividend... 20 Section 64B(3)... 20 Disregarded incoming dividends... 21 Section 64B(3A)... 21 Deemed declarations & accruals... 22 Section 64B(4)... 22 Exemptions... 24 Section 64B(5)... 24 Administration... 28 Section 64B(7)... 28 Long-term insurers... 29 Section 64B(13)... 29 Phase-out of the STC... 30 Section 64B(18), (19)... 30 Dividend-substitutes... 32 Section 64C... 32 Definitions... 32 Section 64C(1)... 32 Share incentive scheme... 32 Deemed declarations of dividends... 34 Section 64C(2)... 34 Exclusions... 36 Section 64C(4)... 36 Technical issues... 40 Section 64C(5)... 40 5 February 2014 Bsp Seminars
By Costa Divaris 2014 Gauteng South Africa Section 64C(6)...40 Quarterly Texts...43 Q4, 2013 Q1, 2013...45 As at 12 December 2013 and 1 January 2013...45 Actual dividends...45 Section 64B...45 As at 12 December 2013 and 1 January 2013...54 Dividend-substitutes...54 Section 64C...54 Q3, 2012 Q2, 2012...61 As at 4 July 2012 and 1 April 2012...61 Actual dividends...61 Section 64B...61 As at 4 July 2012 and 1 April 2012...72 Dividend-substitutes...72 Section 64C...72 Q4, 2011, Q1, 2011 Q4, 2010...79 As at 1 October 2011, 1 January 2011 and 1 October 2010...79 Actual dividends...79 Section 64B...79 As at 1 October 2011, 1 January 2011 and 1 October 2010...91 Dividend-substitutes...91 Section 64C...91 Q1, 2010...101 As at 1 January 2010...101 Actual dividends...101 Section 64B...101 As at 1 January 2010...112 Dividend-substitutes...112 Section 64C...112 Q3,2009; Q1, 2009...119 As at 30 September 2009, 1 March 2009, 11 February 2009 and 1 January 2009...119 Actual dividends...119 Section 64B...119 As at 30 September 2009, 1 March 2009, 11 February 2009 and 1 January 2009...134 Dividend-substitutes...134 Section 64C...134 Q3, 2008; Q1, 2008...141 As at 22 July 2008 and 21 February 2008...141 Actual dividends...141 Section 64B...141 As at 22 July 2008 and 21 February 2008...153 Dividend-substitutes...153 Section 64C...153 Q3, 2007...159 As at 1 October 2007...159 Actual dividends...159 Section 64B...159 As at 1 October 2007...172 Dividend-substitutes...172 Section 64C...172 Q3, 2007; Q1, 2007...181 As at 8 August 2007 and 7 February 2007...181 Actual dividends...181 Section 64B...181 As at 8 August 2007 and 7 February 2007...194 Dividend-substitutes...194 Section 64C...194 Q4, 2005...201 As at 8 November 2005...201 Actual dividends...201 Section 64B...201 As at 8 November 2005...216 Dividend-substitutes...216 6 February 2014 Bsp Seminars
By Costa Divaris 2014 Gauteng South Africa Section 64C... 216 Q1, 2005; Q4, 2004; Q3 2004... 223 As at 24 January 2005, 26 October 2004 and August 2004... 223 Actual dividends... 223 Section 64B... 223 As at 24 January 2005, 26 October 2004 and 6 August 2004... 237 Dividend-substitutes...237 Section 64C... 237 Q2, 2004; Q1, 2004; Q4, 2003... 255 As at 1 June 2004, 1 January 2004 and 22 December 2003... 255 Actual dividends... 255 Section 64B... 255 As at 1 June 2004, 1 January 2004 and 22 December 2003... 272 Dividend-substitutes...272 Section 64C... 272 Q1, 2003; Q4, 2002... 277 As at 3 March 2003, 26 February 2003, 1 January 2003 and 13 December 2002... 277 Actual dividends... 277 Section 64B... 277 As at 3 March 2003, 26 February 2003, 1 January 2003 and 13 December 2002... 289 Dividend-substitutes...289 Section 64C... 289 Q4, 2002; Q3, 2002... 295 As at 6 November 2002 and 5 August 2002... 295 Actual dividends... 295 Section 64B... 295 As at 6 November 2002 and 5 August 2002... 305 Dividend-substitutes...305 Section 64C... 305 Q1, 2002; Q4, 2001... 309 As at 1 January 2002 and 12 December 2001... 309 Actual dividends... 309 Section 64B... 309 As at 1 January 2002 and 12 December 2001... 320 Dividend-substitutes...320 Section 64C... 320 Q2, 2001... 323 As at 20 June 2001... 323 Actual dividends... 323 Section 64B... 323 As at 20 June 2001... 333 Dividend-substitutes...333 Section 64C... 333 Q1, 2001; Q4, 2000; Q1, 2000... 337 As at 1 January 2001, 6 December 2000 and 23 February 2000... 337 Actual dividends... 337 Section 64B... 337 As at 1 January 2001, 6 December 2000 and 23 February 2000... 349 Dividend-substitutes...349 Section 64C... 349 Q4, 1999... 353 As at 24 November 1999... 353 Actual dividends... 353 Section 64B... 353 As at 24 November 1999... 362 Dividend-substitutes...362 Section 64C... 362 Q2, 1998... 365 As at 29 June 1998... 365 Actual dividends... 365 Section 64B... 365 As at 29 June 1998... 374 Dividend-substitutes...374 Section 64C... 374 7 February 2014 Bsp Seminars
By Costa Divaris 2014 Gauteng South Africa Earlier Amendments...377 Income Tax Act 140 of 1993...379 Income Tax Act 21 of 1994...381 Income Tax Act 21 of 1995...384 Income Tax Act 36 of 1996...386 Income Tax Act 46 of 1996...389 Income Tax Act 28 of 1997...390 Major extracts from explanatory memoranda...391 On The Revenue Laws Amendment Bill, 2004...391 On The Revenue Laws Amendment Bill, 2007...391 Editorial conventions for rendering legislation...397 8 February 2014 Bsp Seminars
By Costa Divaris 2014 Gauteng South Africa Table Of Contents Click on GO to go to a particular section. Provisions Title Comments Effective dates Page Click-through consolidated text ss 64B & 64C After all amendments Unannotated version with click-throughs to all amendments Quarterly texts 12 December 2012 GO ss 64B & 64C Q4, 2013 Q1, 2013 Q3, 2012 Q2, 2012 Q4, 2011 Q1, 2011 Q4, 2010 Annotated version 12 December 2013 1 January 2013 Annotated version 04 July 2012, 01 April 2012 Annotated version 01 October 2011, 01 January 2011 01 October 2010 Q1, 2010 Annotated version 01 January 2010 GO Q3, 2009 Q1, 2009 Annotated version 30 September 2009 01 March 2009 11 February 2009 01 January 2009 GO Q3, 2008 Q1, 2008 Annotated version 22 July 2008 21 February 2008 Q3, 2007 Annotated version 01 October 2007 GO Q3, 2007 Annotated version 08 August 2007 GO Q1, 2007 07 February 2007 Q4, 2005 Annotated version 08 November 2005 GO Q1, 2005 Q4, 2004 Q3, 2004 Q2, 2004 Q1, 2004 Q4, 2003 Q1, 2003 Q4, 2002 Q4, 2002 Q3, 2002 Q1, 2002 Q4, 2001 Annotated version 24 January 2005 26 October 2004 26 August 2004 Annotated version 01 June 2004 01 January 2004 22 December 2003 Annotated version 03 March 2003 26 February 2003 01 January 2003 13 December 2003 Annotated version 06 November 2002 05 August 2002 Annotated version 01 January 2002 12 December 2001 Q2, 2001 Annotated version 20 June 2001 GO Q1, 2001 Annotated version 01 January 2001 GO Q4, 2000 06 December 2000 9 February 2014 Bsp Seminars GO GO GO GO GO GO GO GO GO
By Costa Divaris 2014 Gauteng South Africa Q1, 2000 23 February 2000 Q4, 1999 Annotated version 24 November 1999 GO Q2, 1998 Annotated version 29 June 1998 GO Earlier amendments Income Tax Act 140 of 1993 Details of amendments only GO Income Tax Act 21 of 1994 Details of amendments only GO Income Tax Act 21 of 1995 Details of amendments only GO Income Tax Act 36 of 1996 Details of amendments only GO Income Tax Act 46 of 1996 Details of amendments only GO Income Tax Act 28 of 1997 Details of amendments only GO Major extracts from the explanatory memoranda On The Revenue Laws Amendment Bill, 2004 On The Revenue Laws Amendment Bill, 2007 GO GO 10 February 2014 Bsp Seminars
Click-through Consolidated Text Click on GO to read the details of the legislative history at a particular point in the text; then on RETURN to return to your particular point of departure. Main body of the Income Tax Act Part VII Secondary Tax on Companies (ss 64B 64C) Legislative history 1993 Income Tax Act 113 of 1993. Part VII of Chapter II inserted by s 34(1). Effective date set as 17 March 1993 by s 34(2). Inserted by 1. Income Tax Act 113 of 1993 Promulgated 20 July 1993 and amended by 2. Revenue Laws Amendment Act 140 of 1993 Promulgated 13 October 1993 [1993 5 amendments] 3. Income Tax Act 21 of 1994 Promulgated 25 November 1994 [1994 17 amendments] 4. Income Tax Act 21 of 1995 Promulgated 19 July 1995 [1995 7 amendments] 5. Income Tax Act 36 of 1996 Promulgated 3 July 1996 [1996 12 amendments] 11 February 2014 Bsp Seminars
By Costa Divaris 2014 Gauteng South Africa 6. Revenue Laws Amendment Act 46 of 1996 Promulgated 30 September 1996 [1996 3 amendments] 7. Income Tax Act 28 of 1997 Promulgated 4 July 1997 [1997 2 amendments] 8. Taxation Laws Amendment Act 30 of 1998 Promulgated 29 June 1998 [1998 1 amendment] 9. Revenue Laws Amendment Act 53 of 1999 Promulgated 24 November 1999 [1999 3 amendments] 10. Taxation Laws Amendment Act 30 of 2000 Promulgated 19 July 2000 [2000 7 amendments] 11. Revenue Laws Amendment Act 59 of 2000 Promulgated 6 December 2000 [2000 8 amendments] 12. Taxation Laws Amendment Act 5 of 2001 Promulgated 20 June 2001 [2001 1 amendment] 13. Second Revenue Laws Amendment Act 60 of 2001 Promulgated 12 December 2001 [2001 5 amendments] 14. Taxation Laws Amendment Act 30 of 2002 Promulgated 5 August 2002 [2002 1 amendment] 15. Revenue Laws Amendment Act 74 of 2002 Promulgated 13 December 2002 [2002 13 amendments] 16. Exchange Control Amnesty and Amendment of Taxation Laws Act 12 of 2003 Promulgated 31 May 2003 [2003 3 amendments] 17. Revenue Laws Amendment Act 45 of 2003 Promulgated 22 December 2003 [2003 39 amendments] 18. Revenue Laws Amendment Act 32 of 2004 Promulgated 24 January 2005 [2005 37 amendments] 19. Taxation Laws Amendment Act 9 of 2005 Promulgated 19 June 2005 [2005 1 amendment] 20. Revenue Laws Amendment Act 31 of 2005 Promulgated 1 February 2006 12 February 2014 Bsp Seminars
[2006 15 amendments] 21. Revenue Laws Amendment Act 20 of 2006 Promulgated 7 February 2007 [2007 4 amendments] 22. Taxation Laws Amendment Act 8 of 2007 Promulgated 8 August 2007 [2007 2 amendments] 23. Revenue Laws Amendment Act 35 of 2007 Promulgated 8 January 2008 [2008 10 amendments] 24. Taxation Laws Amendment Act 3 of 2008 Promulgated 22 July 2008 [2008 11 amendments] 25. Revenue Laws Amendment Act 60 of 2008 Promulgated 8 January 2009 [2009 3 amendments] 26. Taxation Laws Amendment Act 17 of 2009 Promulgated 30 September 2009 [2009 14 amendments] 27. Taxation Laws Amendment Act 7 of 2010 Promulgated 2 November 2010 [2010 20 amendments] By Costa Divaris 2014 Gauteng South Africa 28. Voluntary Disclosure Programme and Taxation Laws Second Amendment Act 8 of 2010 Promulgated 2 November 2010 [2010 0 amendments] 29. Skills Development Levies Amendment Act 24 of 2010 Promulgated 7 December 2010 [2010 0 amendments] 30. Taxation Laws Second Amendment Act 25 of 2011 Promulgated 14 December 2011 [2011 0 amendments] 31. Taxation Laws Amendment Act 24 of 2011 Promulgated 10 January 2012 [2012 4 amendments] 32. Tax Administration Act 28 of 2011 Promulgated 4 July 2012 [2012 2 amendments] 33. Rates and Monetary Amounts and Amendment of Revenue Laws Act 13 of 2012 Promulgated 9 October 2012 [2012 0 amendments] 34. Tax Administration Laws Amendment Act 21 of 2012 Promulgated 20 December 2012 [2012 0 amendments] 19. Taxation Laws Amendment Act 22 of 2012 Promulgated 1 February 2013 13 February 2014 Bsp Seminars
By Costa Divaris 2014 Gauteng South Africa [2013 2 amendments] 20. Rates and Monetary Amounts and Amendment of Revenue Laws Act 23 of 2013 Promulgated 2 December 2013 [2013 0 amendments] 21. Employment Tax Incentive Act 26 of 2013 Promulgated 18 December 2013 [2013 0 amendments] 22. Taxation Laws Amendment Act 31 of 2013 Promulgated 12 December 2013 [2013 2 amendments] 23. Merchant Shipping (International Oil Pollution Compensation Fund) Administration Act 35 of 2013 Promulgated 18 December 2013 [2013 0 amendments] 24. Merchant Shipping (International Oil Pollution Compensation Fund) Administration Act 36 of 2013 Promulgated 8 January 2014 [2014 0 amendments] 25. Tax Administration Laws Amendment Act 39 of 2013 Promulgated 16 January 2014 [2014 0 amendments] 14 February 2014 Bsp Seminars
The Secondary Tax On Companies After all amendments The secondary tax on companies ITA s 64B THE SECONDARY TAX ON COMPANIES Section 64B [ 64B] Levy and recovery of secondary tax on companies Definitions ITA s 64B(1) Definitions DEFINITIONS Section 64B(1) [ 64B(1)] 64B. (1) For the purposes of this Part [Part VII Secondary Tax on Companies ] [ Checked against original text of Act 36 of 1996] [s 21(1)(a) of Act 36 of 1996 GO] [A]ffected company [Deleted.]; [ Checked against original text of Act 74 of 2002] 15 February 2014 Bsp Seminars
[s 36(1)(a) of Act 74 of 2002 GO] [s 21(1)(b) of Act 36 of 1996 GO] Declared Declared ITA s 64B(1) sv declared DECLARED [ 64B(1)] [D]eclared, in relation to any dividend (including a dividend in specie), means the approval of the payment or distribution thereof by the directors of the company or by some other person with comparable authority or, in the case of the liquidation of a company, by the liquidator thereof; [ Checked against original text of Act 7 of 2010] [s 68(1)(a) of Act 7 of 2010 GO] [s 47(1)(a) of Act 31 of 2005 GO] Dividend cycle Dividend cycle ITA s 64B(1) sv dividend cycle [D]ividend cycle means (a) DIVIDEND CYCLE [ 64B(1)] 1 First dividend: ordinary companies in relation to the first dividend declared by a company (other than a company which carries on long-term insurance business) on or after 17 March 1993, the period commencing on the later of [ Checked against original text of Act 21 of 1994] [s 24(1)(a) of Act 21 of 1994 GO] i. 1 September 1992 (i) 1 September 1992; [ Checked against original text of Act 45 of 2003] [s 58(1)(a) of Act 45 of 2003 GO] ii. Day following declaration (ii) the day following the date of declaration of the last dividend (other than a dividend in specie or a dividend payable on a preference share) declared by the company prior to 17 March 1993[;] iii. Date of commencement (iii) the date on which that company was incorporated, formed or otherwise established; and [ Checked against original text of Act 45 of 2003] [s 58(1)(b) of Act 45 of 2003 GO] (iv) iv. Date of residency the date on which that company becomes a resident, [ Checked against original text of Act 45 of 2003] [s 58(1)(b) of Act 45 of 2003 #2 GO] End of cycle 16 February 2014 Bsp Seminars
and ending on the date on which such first dividend accrues to the shareholder concerned or on which the amount is deemed to have been declared as contemplated in section 64C(6); [ Checked against original text of Act 20 of 2006] [s 32(a) of Act 20 of 2006 GO] [s 58(1)(c) of Act 45 of 2003 GO] [s 24(1)(b) of Act 21 of 1994 GO] 2 Long-term insurance companies (aa) in relation to the first dividend declared by a company which carries on long-term insurance business out of profits derived during any year of assessment commencing on or after 1 July 1993, the period commencing on the later of [ Checked against original text of Act 21 of 1994: see below] i. Formation or 1 July 1993 (i) the later date of the date on which that company was incorporated, formed or otherwise established or 1 July 1993; and [ Checked against original text of Act 35 of 2007] [s 59(1)(a) of Act 35 of 2007 GO] ii. Day after declaration (ii) the day following the date of declaration of the last dividend (other than a dividend in specie or a dividend payable on a preference share) declared by the company prior to the declaration of the said first dividend, [ Checked against original text of Act 21 of 1994: see below] End of cycle and ending on the date on which such first dividend accrues to the shareholder concerned or on which the amount is deemed to have been declared as contemplated in section 64C(6); [ Checked against original text of Act 35 of 2007] [s 59(1)(b) of Act 35 of 2007 GO] [s 58(1)(d) of Act 45 of 2003 GO] [s 24(1)(c) of Act 21 of 1994 GO] 3 Subsequent dividends, all companies (b) in relation to any subsequent dividend declared by that company, the period commencing immediately after the previous dividend cycle of the company and ending on the date on which such dividend accrues to the shareholder concerned or on which the amount is deemed to have been distributed as contemplated in section 64C(6)[:] [ Checked against original text of Act 35 of 2007] [s 59(1)(c) of Act 35 of 2007 GO] [s 58(1)(e) of Act 45 of 2003 GO] (i) (ii) SPECIAL RULES ON EFFECTIVE DATE Provided that 1 Has not ended before effective date any dividend cycle of a company that has commenced and that has not ended before the effective date defined in section 64D must be deemed to have ended on the day immediately before that effective date and must be deemed to be the final dividend cycle of that company; and 2 Ends before effective date where a dividend cycle of a company ends on the day immediately before the effective date defined in section 64D, that dividend cycle must be deemed to be the final dividend cycle of that company [ Checked against original text of Act 17 of 2009] [s 51(1)(a) of Act 17 of 2009 GO] 17 February 2014 Bsp Seminars
Group of companies Group of companies ITA s 64B(1) sv group of companies GROUP OF COMPANIES [ 64B(1)] [G]roup of companies means group of companies as defined in section 41; and [ Checked against original text of Act 35 of 2007] [s 59(1)(d) of Act 35 of 2007 GO] [H]olding company [Deleted.]; [ Checked against original text of Act 74 of 2002] [s 36(1)(a) of Act 74 of 2002 #2 GO] [s 48(1)(a) of Act 60 of 2001 GO] [s 21(1)(c) of Act 36 of 1996 GO] [I]ntermediate company [Deleted.]; [ Checked against original text of Act 45 of 2003] [s 215(1) of Act 45 of 2003 GO] [s 36(1)(a) of Act 74 of 2002 #3 GO] [s 36(1)(b) of Act 74 of 2002 GO] [s 48(1)(b) of Act 60 of 2001 GO] [s 21(1)(c) of Act 36 of 1996 #2 GO] Profit Profit ITA s 64B(1) sv profit PROFIT [ 64B(1)] [P]rofit includes any amount deemed in terms of the definition of dividend in section 1 to be a profit available for distribution; [ Checked against original text of Act 31 of 2005] [s 47(1)(b) of Act 31 of 2005 GO] [S]hare incentive scheme [Deleted.]; [ Checked against original text of Act 60 of 2001] [s 48(1)(c) of Act 60 of 2001 GO] [s 25(1)(a) of Act 28 of 1997 GO] [s 21(1)(c) of Act 36 of 1996 #3 GO] 18 February 2014 Bsp Seminars
Actual dividends Section 64B(2) Levy of the secondary tax on companies ITA s 64B(2) CHARGING PROVISION [ 64B(2)] (2) There shall be levied and paid for the benefit of the National Revenue Fund a tax, to be known as the secondary tax on companies, which is calculated at the rate of 10 per cent of the net amount, as determined in terms of [s 64B(3)], of any dividend declared by any company, other than a headquarter company, which is a resident. [ Checked against original text of Act 7 of 2010] [s 68(1)(b) of Act 7 of 2010 GO] [s 59(1)(e) of Act 35 of 2007 GO] [s 42(1)(a) of Act 59 of 2000 GO] [s 21(1)(d) of Act 36 of 1996 GO] [s 24(1)(d) of Act 21 of 1994 GO] 19 February 2014 Bsp Seminars
Net amount of dividend Net amount of dividend ITA s 64B(3) NET AMOUNT OF DIVIDEND Section 64B(3) [ 64B(3)] (3) Subject to [s 64B(3A)], the net amount of any dividend referred to in [s 64B(2)] is the amount by which the dividend declared by a company exceeds the sum of any dividends DISQUALIFIED INCOMING DIVIDENDS (other than any dividends contemplated in [s 64B(5)(c)]) [ 64B(3)] QUALIFYING INCOMING DIVIDENDS [ 64B(3)] which have accrued to that company during the dividend cycle in relation to that first-mentioned dividend: [ Checked against original text of Act 31 of 2005] [s 47(1)(c) of Act 31 of 2005 GO] [s 40(1)(a) of Act 32 of 2004 GO] [s 58(1)(f) of Act 45 of 2003 GO] [s 42(1)(b) of Act 59 of 2000 GO] [s 39(1)(a) of Act 30 of 2000 GO] [s 24(1)(e) of Act 21 of 1994 GO] Provided that (a) (b) SPECIAL CIRCUMSTANCES [ 64B(3)] 1 Incoming dividends > outgoing dividends [ 64B(3)] where the sum of such dividends accrued exceeds such dividend declared, the excess shall be carried forward and be deemed to be a dividend which accrued to the company during the succeeding dividend cycle of the company; and 2 Special deduction [ 64B(3)] in the determination of the net amount of any dividend distributed in the course or in anticipation of the liquidation, winding up, deregistration or final termination of the corporate existence of a company, there shall be allowed as a deduction any dividend contemplated in subsection (5)(c)(i) or (ii) which has during the current or any previous dividend cycle accrued to the company. [ Checked against original text of Act 3 of 2008] [s 32(1)(a) of Act 3 of 2008 GO] [s 47(1)(d) of Act 31 of 2005 GO] [s 29(1)(a) of Act 21 of 1995 GO] 20 February 2014 Bsp Seminars
Disregarded incoming dividends Disregarded incoming dividends ITA s 64B(3A) DISREGARDED INCOMING DIVIDENDS Section 64B(3A) [ 64B(3A)] (3A) In determining the sum of the dividends which have accrued to a company as contemplated in [s 64B(3)], no regard must be had to [ Checked against original text of Act 32 of 2004; see below] (a) (b) (c) (d) (e) 1 Disqualified exempt dividends [ 64B(3A)] any dividend contemplated in [s 64B(5)(b) or (f)]; [ Checked against original text of Act 31 of 2005] [s 47(1)(e) of Act 31 of 2005 GO] [Deleted.]; [ Checked against original text of Act 17 of 2009] [s 51(1)(b) of Act 17 of 2009 GO] 2 Dividends on shorted shares [ 64B(3A)] any dividend which accrued to a borrower as contemplated in the definition of securities lending arrangement in respect of a share which was borrowed in terms of that arrangement; [ Checked against original text of Act 7 of 2010] [s 68(1)(c) of Act 7 of 2010 GO] [Deleted.]; [ Checked against original text of Act 17 of 2009] [s 51(1)(c) of Act 17 of 2009 GO] [s 40(1)(b) of Act 32 of 2004 #2 GO] [s 25 of Act 9 of 2005 GO] [s 40(1)(b) of Act 32 of 2004 #1 GO] [Proviso deleted.]; or [ Checked against original text of Act 7 of 2010] [ Checked against original text of Act 17 of 2009] [s 68(1)(d) of Act 7 of 2010 GO] [s 51(1)(d) of Act 17 of 2009 GO] 3 Headquarter company [ 64B(3A)] any dividend declared by a headquarter company. [ Checked against original text of Act 7 of 2010] [s 68(1)(e) of Act 7 of 2010 GO] 21 February 2014 Bsp Seminars
Deemed declarations & accruals Registration of shareholders ITA s 64B(4)(a) REGISTRATION OF SHAREHOLDERS Section 64B(4) [ 64B(4)] (4)(a) Where any dividend is declared by a company subject to the condition that it will be payable to shareholders registered in the company s share register on a specified date, such dividend or interim dividend shall for the purposes of this section [s 64B] be deemed to accrue to the shareholders on that date. SPECIAL DECLARATIONS [ 64B(4)(a)] Provided that any dividend so declared by a company 1 Before effective date [ 64B(4)(a)] (i) before the effective date as defined in section 64D; and 2 Later accrual [ 64B(4)(a)] (ii) that will only accrue to shareholders in that company s share register on a date after that effective date, DEEMED DECLARATION DATE [ 64B(4)(a)] must be deemed to have accrued to such shareholders on the day immediately before that effective date. [ Checked against original text of Act 22 of 2012] [s 81(1) of Act 22 of 2012 GO] Interim dividends ITA s 64B(4)(b) INTERIM DIVIDENDS [ 64B(4)] (b) Any interim dividend declared by a company otherwise than as contemplated in [s 64B(4)(a)], shall for the purposes of this section [s 64B] be deemed to accrue to the shareholders on the date upon which it is declared. Unconventional distributions ITA s 64B(4)(c) UNCONVENTIONAL DISTRIBUTIONS [ 64B(4)] (c) Where any cash or assets is or are transferred or distributed [ Checked against original text of Act 45 of 2003] [s 58(1)(g) of Act 45 of 2003 GO] 1 Informal distribution [ 64B(4)] (i) by a company to shareholders of that company otherwise than by way of a formal declaration of a dividend; or 2 Distribution by liquidator 22 February 2014 Bsp Seminars
(ii) [ 64B(4)] by the liquidator of a company to the shareholders of that company in the course of the winding up or liquidation of that company, DEEMED DATE DECLARATION/ACCRUAL [ 64B(4)] and the amount of such cash or the value of such assets, in whole or in part constitutes a dividend, such dividend shall for the purposes of this section [s 64B] be deemed to have been declared by the company and to have accrued to the shareholders on the date on which the shareholders became entitled to such cash or assets. 23 February 2014 Bsp Seminars
Exemptions Section 64B(5) Exemptions ITA s 64B(5) STC EXEMPTIONS [ 64B(5)] (5) There shall be exempt from the secondary tax on companies (a) (b) (c) (d) (e) 1 Declared by qualifying exempt companies [ 64B(5)] dividends declared by any company (other than a company that is a registered micro business as defined in the Sixth Schedule [Turnover tax]) the entire receipts and accruals of which, or so much of the receipts and accruals of which as are derived otherwise than from investments, are exempt from tax under the provisions of section 10 [ Checked against original text of Act 17 of 2009] [s 51(1)(e) of Act 17 of 2009 GO] [s 58(1)(h) of Act 45 of 2003 GO] [s 12(1)(a) of Act 140 of 1993 GO] 2 Deductible declarations [ 64B(5)] any dividend declared by a fixed property company contemplated in section 11(s) which may be allowed as a deduction in the determination of the taxable income of such company in terms of the provisions of that section [s 11(s)]; [Deleted.]; [ Checked against original text of Act 7 of 2010] [s 68(1)(f) of Act 7 of 2010 GO] [s 47(1)(f) of Act 31 of 2005 GO] [s 58(1)(i) of Act 45 of 2003 GO] [s 32(1)(b) of Act 3 of 2008 GO] [s 32(1)(c) of Act 3 of 2008 GO] [Sources quoting s 32(1)(b) are incorrect.] [s 58(1)(j) of Act 45 of 2003 GO] [s 39(1)(a) of Act 8 of 2007 GO] [s 131(1) of Act 60 of 2008 GO] [s 59(1)(f)] of Act 35 of 2007 GO] [s 36(1)(c) of Act 74 of 2002 GO] [Substitution of para (c)] [s 25 of Act 30 of 2002 GO] [s 48(1)(d) of Act 60 of 2001 GO] [s 29(1)(b) of Act 21 of 1995 GO] [Substitution of para (c)] [s 24(1)(f) of Act 21 of 1994 GO] [s 12(1)(b) of Act 140 of 1993 GO] [Deleted.] [ Checked against original text of Act 32 of 2004] [s 40(1)(c) of Act 32 of 2004 GO] [s 36(1)(d) of Act 74 of 2002 GO] [s 39(1)(b) of Act 30 of 2000 GO] 3 Declarations by gold-mining companies [ 64B(5)] so much of any dividend declared by a company referred to in [s 64B(12)(e)] during any subsequent year of assessment as contemplated in that subsection [s 64B(12)(e)], as represents a distribution of an amount received by or accrued to such company as a result of the disposal of gold mining assets; [ Checked against original text of Act 21 of 1994] 24 February 2014 Bsp Seminars
(f) 4 Declarations under group exemption [s 24(1)(g) of Act 21 of 1994 GO] [ 64B(5)] any dividend declared by a controlled group company as contemplated in the definition of group of companies which accrues to a shareholder (as defined in Part III) of that company if [ Checked against original text of Act 35 of 2007] [s 59(1)(g) of Act 35 of 2007 GO] [s 58(1)(k) of Act 45 of 2003 GO] (i) (ii) (iii) (iv) (v) i. Same group that shareholder is a company forming part of the same group of companies as the company declaring the dividend; [ Checked against original text of Act 7 of 2010] [s 68(1)(g) of Act 7 of 2010 GO] [s 59(1)(h) of Act 35 of 2007 GO] [Deleted.][;] [ Checked against original text of Act 31 of 2005] [s 47(1)(g) of Act 31 of 2005 GO] [s 58(1)(l) of Act 45 of 2003 GO] ii. Shareholder otherwise liable that shareholder would be subject to secondary tax on companies should that shareholder If declares (aa) declare a dividend from that dividend so declared by that company; and If fails to elect (bb) not elect that this paragraph [s 64B(5)(f)] must apply in respect of that dividend; and [ Checked against original text of Act 32 of 2004] [s 40(1)(d) of Act 32 of 2004 GO] [s 58(1)(m) of Act 45 of 2003 GO] [Deleted.]; [ Checked against original text of Act 45 of 2003] [s 58(1)(n) of Act 45 of 2003 GO] iii. Election the company declaring the dividend elects the exemption under this paragraph [s 64B(5)(f)] to apply by submitting this election Deadline (aa) no later than the last day on which the secondary tax on companies would otherwise be due but for this paragraph [s 64B(5)(f)] (or no later than any other subsequent date prescribed by the Commissioner), and Form (bb) in such form as the Commissioner may prescribe; [ Checked against original text of Act 74 of 2002: see below] Exclusion shares Provided that this exemption [s 64B(5)(f)?] shall not apply to the extent to which that dividend consists of any shares in that shareholder: [There is no telling what the idiot draftsperson intends here.] Exclusion group to group Provided further that the provisions of this paragraph [s 64B(5)(f)?] do not apply in respect of a dividend declared by a controlling group company to a controlled group company in relation to that controlling group company[;] [There is no telling what the idiot draftsperson intends here.] [ Checked against original text of Act 3 of 2008] 25 February 2014 Bsp Seminars
(g) (h) [Deleted.]; [Deleted.]; [s 32(1)(d) of Act 3 of 2008 GO] [s 59(1)(i) of Act 35 of 2007 GO] [s 47(1)(h) of Act 31 of 2005 GO] [s 47(1)(i) of Act 31 of 2005 GO] [s 40(1)(e) of Act 32 of 2004 GO] [s 58(1)(o) of Act 45 of 2003 GO] [s 36(1)(e) of Act 74 of 2002 GO] [s 48(1)(e) of Act 60 of 2001 GO] [s 21(1)(e) of Act 36 of 1996 GO] [s 29(1)(c) of Act 21 of 1995 GO] [s 24(1)(g) of Act 21 of 1994 #3 GO] [ Checked against original text of Act 3 of 2008] [s 32(1)(e) of Act 3 of 2008 GO] [s 13(1)(a) of Act 46 of 1996 GO] [s 21(1)(f) of Act 36 of 1996 GO] [s 21(1)(g) of Act 36 of 1996 GO] [s 24(1)(g) of Act 21 of 1994 #2 GO] [ Checked against original text of Act 59 of 2000] [s 42(1)(c) of Act 59 of 2000 GO] [s 21(1)(h) of Act 36 of 1996 GO] 5 Declarations by tax-holiday companies [ 64B(5)] (i) in the case of any company which is a qualifying company as defined in section 37H, any dividend declared by such company during the period ending six months after the end of the last year of assessment during which such company qualifies for the tax holiday status referred to in that section [s 37H] out of profits derived during the period during which such company qualifies for such tax holiday status; [ Checked against original text of Act 7 of 2010] [s 68(1)(h) of Act 7 of 2010 GO] [s 32(1)(f) of Act 3 of 2008 GO] [s 13(1)(b) of Act 46 of 1996 GO] (j) [Deleted.]. [ Checked against original text of Act 17 of 2009] [s 51(1)(f) of Act 17 of 2009 GO] [s 32(1)(f)] of Act 3 of 2008 #2 GO] [s 39(1)(c) of Act 30 of 2000 GO] [s 13(1)(b) of Act 46 of 1996 #2 GO] 6 Transfer of interest in residence [ 64B(5)] (k) any dividend declared by a company to a natural person which constitutes a transfer of an interest in a residence as contemplated in paragraph 51 of the Eighth Schedule [CGT]; [ Checked against original text of Act 7 of 2010] [s 68(1)(i) of Act 7 of 2010 GO] [s 51(6)(a) of Act 7 of 2010 GO] [s 51(1)(g) of Act 17 of 2009 GO] [s 47(1)(j) of Act 31 of 2005 GO] [s 18 of Act 5 of 2001 GO] 7 Disposal of interest in residence [ 64B(5)] (ka) any dividend declared by a company which constitutes a disposal of an interest in a residence as contemplated in paragraph 51A of the Eighth Schedule [CGT]; and [ Checked against original text of Act 7 of 2010] [s 68(1)(j) of Act 7 of 2010 GO] 8 Micro business [ 64B(5)] (l) any dividend declared by any company that is a registered micro business as defined in the Sixth Schedule [Micro businesses] during any year of assessment during which such company is a registered micro business, to the extent that such dividend does not exceed the amount of 26 February 2014 Bsp Seminars
R200 000 during such year. (6) [Deleted.]. [ Checked against original text of Act 17 of 2009] [s 51(1)(g) of Act 17 of 2009 GO] [ Checked against original text of Act 45 of 2003] [s 58(1)(p) of Act 45 of 2003 GO] [s 42(1)(d) of Act 59 of 2000 GO] [s 39(1)(d) of Act 30 of 2000 GO] [s 39(1)(e) of Act 30 of 2000 GO]] [s 25(1)(b) of Act 28 of 1997 GO] 27 February 2014 Bsp Seminars
Administration Section 64B(7) Payment ITA s 64B(7) DATE FOR PAYMENT [ 64B(7)] (7) The secondary tax on companies shall be paid to the Commissioner by the company liable therefore by not later than the last day of the month following the month in which the dividend cycle relevant to such dividend ends and each payment of such tax shall be accompanied by a return in such form as the Commissioner may require: [ Checked against original text of Act 45 of 2003] [s 58(1)(q) of Act 45 of 2003 GO] SPECIAL CIRCUMSTANCES [ 64B(7)] Provided that 1 Extension of date for payment [ 64B(7)] (i) the Commissioner may in any case extend the applicable date of payment; and 2 Month [ 64B(7)] (ii) for the purposes of this subsection [s 64B(7)] the expression month means any of the twelve portions into which any calendar year is divided. [ Checked against original text of Act 32 of 2004] [s 40(1)(f) of Act 32 of 2004 GO] Estimated assessment ITA s 64B(8) ESTIMATED ASSESSMENT [ 64B(8)] (8) Where the Commissioner is satisfied that any amount of secondary tax on companies has not been paid in full, he may estimate the unpaid amount and issue to the company concerned a notice of assessment of the unpaid amount. (9) [Deleted.]. [ Checked against original text of Act 28 of 2011] [para 54 Sch 1 of Act 28 of 2011 #1 GO] (10) [Deleted.]. [ Checked against original text of Act 45 of 2003] [s 58(1)(r) of Act 45 of 2003 GO] [s 36(1)(f) of Act 74 of 2002 GO] (11) [Deleted.]. [ Checked against original text of Act 28 of 2011] [para 54 Sch 1 of Act 28 of 2011 #2 GO] [s 40(1)(g) of Act 32 of 2004 GO] (12) [Deleted.]. [ Checked against original text of Act 31 of 2013] [s 100(1) of Act 31 of 2013 GO] 28 February 2014 Bsp Seminars
Long-term insurers Long-term insurer s net amount ITA s 64B(13) NET AMOUNT OF LONG-TERM INSURER Section 64B(13) [ 64B(13)] (13) In the determination of the net amount of any dividend declared by a company which carries on long-term insurance business, the amount to be taken into account in terms of [s 64B(3)] in respect of dividends accrued to the company shall be limited to dividends accrued on shares constituting an asset in its corporate fund. [ Checked against original text of Act 17 of 2009] [s 51(1)(h) of Act 17 of 2009 GO] [s 39(1)(b) of Act 8 of 2007 GO] [s 32(b) of Act 20 of 2006 GO] [s 32(c) of Act 20 of 2006 GO] [s 35(b) of Act 53 of 1999 GO] (14) [Deleted.]. [ Checked against original text of Act 20 of 2006] [s 32(d) of Act 20 of 2006 GO] [s 35(c) of Act 53 of 1999 GO] (15) [Deleted.]. [ Checked against original text of Act 3 of 2008] [s 32(1)(g) of Act 3 of 2008 #1 GO] [s 24(1)(h) of Act 21 of 1994 GO] (16) [Deleted.]. [ Checked against original text of Act 3 of 2008] [s 32(1)(g) of Act 3 of 2008 #2 GO] [s 24(1)(h) of Act 21 of 1994 #2 GO] (17) [Deleted.]. [ Checked against original text of Act 3 of 2008] [s 32(1)(g) of Act 3 of 2008 #3 GO] [s 24(1)(h) of Act 21 of 1994 #3 GO] 29 February 2014 Bsp Seminars
Phase-out of the STC Section 64B(18), (19) [THIS PROVISION NEVER CAME INTO EXISTENCE] ITA s 64B(18) (18) [Never came into existence.]. [ Checked against original text of Act 17 of 2009] PREVIOUS WORDING: (18) For the purposes of this section [s 64B], a company that has not declared a dividend on the day immediately before the effective date defined in section 64D is deemed to have declared a dividend of nil on that day. [ Checked against original text of Act 60 of 2008] Legislative history 2009 Revenue Laws Amendment Act 60 of 2008. Section 64B(18) inserted by s 55(1). Effective date set as the date on which Part VIII of Chapter II (Dividends tax) of the Income Tax Act, 1962 comes into operation by s 55(2). Amendment to amendment See below. Extract from the Explanatory Memorandum on the Revenue Laws Amendment Bill, 2008 See notes on CONVERSION FROM STC TO DIVIDEND TAX[.] [Not included here.] Legislative history Amendment to amendment 2009 Taxation Laws Amendment Act 17 of 2009. Section 55 of Revenue Laws Amendment Act 60 of 2008 deleted by s 107(1). Effective date set as 21 October 2008 by s 107(2). Extract from the Explanatory Memorandum on the Taxation Laws Amendment Bill, 2009 See notes on Clause 51(1)(a). Ex clause 51(1)(a). Subclause (a): See notes on DIVIDENDS TAX: GENERAL OVERVIEW[.] [Not included here.] [The Treasury simply cannot resist an opportunity to use a cross-reference, even to a cross-reference. [THIS PROVISION NEVER CAME INTO EXISTENCE] ITA s 64B(19) (19) [Never came into existence.]. [ Checked against original text of Act 17 of 2009] PREVIOUS WORDING: (19) Secondary tax on companies must not be levied in respect of a dividend declared on or after the effective date as defined in section 64D. [ Checked against original text of Act 60 of 2008] Legislative history 2009 Revenue Laws Amendment Act 60 of 2008. Section 64B(19) inserted by s 55(1). Effective date set as the date on which Part VIII of Chapter II (Dividends tax) of the Income Tax Act, 1962 comes into operation by s 55(2). Amendment to amendment See below. Extract from the Explanatory Memorandum on the Revenue Laws Amendment Bill, 2008 See notes on CONVERSION FROM STC TO DIVIDEND TAX[.] 30 February 2014 Bsp Seminars
[Not included here.] Legislative history Amendment to amendment 2009 Taxation Laws Amendment Act 17 of 2009. Section 55 of Revenue Laws Amendment Act 60 of 2008 deleted by s 107(1). Effective date set as 21 October 2008 by s 107(2). Extract from the Explanatory Memorandum on the Taxation Laws Amendment Bill, 2009 See notes on Clause 51(1)(a). Ex clause 51(1)(a). Subclause (a): See notes on DIVIDENDS TAX: GENERAL OVERVIEW[.] [Not included here.] [The Treasury simply cannot resist an opportunity to use a cross-reference, even to a cross-reference. 31 February 2014 Bsp Seminars
Dividend-substitutes Section 64C Dividend-substitutes ITA s 64C DIVIDEND SUBSTITUTES [ 64C] Certain amounts distributed deemed to be dividends Definitions ITA s 64C(1) Definitions DEFINITIONS Section 64C(1) [ 64C(1)] 64C. (1) For the purposes of this section [s 64C] [ ] [R]ecipient [Deleted.]; [ Checked against original text of Act 45 of 2003] [s 59(1)(a) of Act 45 of 2003 GO] [s 116 of Act 32 of 2004 #1 GO] [s 40(1)(a) of Act 30 of 2000 GO] [s 40(1)(b) of Act 30 of 2000 GO] Share incentive scheme Share incentive scheme ITA s 64C(1) sv share incentive scheme SHARE INCENTIVE SCHEME [ 64C(1)] [S]hare incentive scheme means a scheme in terms of which not more than 20 per cent of the equity share capital of a company is (a) 1 Held by directors & employees held by the directors and full-time employees of i. The company (i) such company; or ii. An associated institution (ii) an associated institution, as defined in paragraph 1 of the Seventh Schedule, in relation to such company, Under share incentive scheme in terms of a share incentive scheme carried on for their own benefit; [ Checked against original text of Act 24 of 2011] [ Checked against original text of Act 74 of 2002] [s 74(1)(a) of Act 24 of 2011 GO] [s 69(1)(a) of Act 7 of 2010 GO] 32 February 2014 Bsp Seminars
(b) (c) 2 Held by trustee under employee share scheme held by a trustee for the benefit of such directors and employees under an employee share scheme as defined in section 95(1)(c) of the Companies Act; or [ Checked against original text of Act 31 of 2013] [s 100(1) of Act 31 of 2013 GO] [s 74(1)(b) of Act 24 of 2011 GO] [s 69(1)(b) of Act 7 of 2010 GO] 3 Collectively held collectively held by such directors and full-time employees, and such a trustee. [ Checked against original text of Act 74 of 2002] [s 37(1)(a) of Act 74 of 2002 GO] 33 February 2014 Bsp Seminars
Deemed declarations of dividends Deemed declarations of dividends ITA s 64C(2) DIVIDENDS DEEMED TO BE DECLARED Section 64C(2) [ 64C(2)] (2) For the purposes of section 64B, an amount shall, subject to the provisions of [s 64C(4)], be deemed to be a dividend declared by a company to a shareholder, where 1 Distributions & transfers to shareholders [ 64C(2)] (a) any cash or asset is distributed or transferred by that company to or for the benefit of that shareholder or any connected person in relation to that shareholder; [ Checked against original text of Act 45 of 2003: see below] 2 Release or relief from obligation [ 64C(2)] (b) the shareholder or any connected person in relation to that shareholder is released or relieved from any obligation measurable in money which is owed to that company by that shareholder or connected person, to the extent that the amount so owed was not already deemed to be a dividend declared by that company in terms of [s 64C(2)(g)]; [ Checked against original text of Act 32 of 2004] [s 41(1)(a) of Act 32 of 2004 GO] 3 Debt settled [ 64C(2)] (c) any debt owed by the shareholder or any connected person in relation to that shareholder to any third party is paid or settled by that company; 4 Amount used or applied [ 64C(2)] (d) any amount is used or applied by that company in any other manner for the benefit of the shareholder or any connected person in relation to that shareholder; [ Checked against original text of Act 45 of 2003: see below] 5 Fruits of transfer-pricing [ 64C(2)] (e) that amount represents the greater of i. Difference (i) the difference between Before (aa) the taxable income or assessed loss of that company; and After (bb) the taxable income or assessed loss of that company without regard to section 31(2); and ii. Nil (ii) nil. [ Checked against original text of Act 7 of 2010] 34 February 2014 Bsp Seminars
(f) (g) (h) 6 Cessation of residence [s 69(1)(c) of Act 7 of 2010 GO] [s 48(1)(a) of Act 31 of 2005 GO] [ 64C(2)] the company ceases to be a resident to the extent that the market value of all the assets of the company on the date immediately before the day on which the company ceases to be a resident exceeds i. Liabilities (i) the liabilities of that company as at that date; and ii. Contributed tax capital (ii) the sum of the contributed tax capital of all the classes of shares of that company as at that date; [ Checked against original text of Act 7 of 2010] [s 69(1)(d) of Act 7 of 2010 GO] [s 48(1)(b) of Act 31 of 2005 GO] 7 Loans & advances [ 64C(2)] any loan or advance is granted and made available to that shareholder or connected person in relation to that shareholder[;] [ Checked against original text of Act 31 of 2005] [ Checked against original text of Act 45 of 2003: see below] [s 48(1)(b) of Act 31 of 2005 #2 GO] [s 41(1)(b) of Act 32 of 2004 GO] 8 Hybrid financial instruments [ 64C(2)] that amount is incurred by that company in terms of an instrument in respect of which section 8F applies[:] [ Checked against original text of Act 32 of 2004] [s 41(1)(c) of Act 32 of 2004 GO] [s 59(1)(b) of Act 45 of 2003 GO] [s 116 of Act 32 of 2004 #2 GO] [s 37(1)(b) of Act 74 of 2002 GO] EXCLUSION OF LISTED SHARES [ 64C(2)] Provided that, for purposes of this subsection [s 64C(2)], in determining whether a person is a shareholder or connected person in relation to a shareholder in relation to any company, no regard must be had to any share that is a listed share[.] [ Checked against original text of Act 7 of 2010] [s 69(1)(e) of Act 7 of 2010 GO] [s 52(1)(a) of Act 17 of 2009 GO] (3) [Deleted.]. [ Checked against original text of Act 45 of 2003] [s 116 of Act 32 of 2004 #3 GO] [s 59(1)(c) of Act 45 of 2003 GO] [s 38(1)(a) of Act 12 of 2003 GO] [s 38(1)(a) of Act 12 of 2003 #2 GO] [s 38(1)(b) of Act 12 of 2003 GO] [s 37(1)(c) of Act 74 of 2002 GO] [s 30(a) of Act 21 of 1995 GO] [s 30(b) of Act 21 of 1995 GO] [s 30(c) of Act 21 of 1995 GO] 35 February 2014 Bsp Seminars
Exclusions Section 64C(4) Exclusions ITA s 64C(4) EXCLUSIONS [ 64C(4)] (4) The provisions of [s 64C (2)] shall not apply [ Checked against original text of Act 45 of 2003] [s 59(1)(d) of Act 45 of 2003 GO] [s 116 of Act 32 of 2004 #4 GO] (a) where the amount would have constituted a dividend as defined in section 1 without regard to paragraphs (i), (ii), (iii) and (iv) of that definition [of a dividend in s 1]; [ Checked against original text of Act 22 of 2012] [s 82(1) of Act 22 of 2012 GO] [s 74(1)(c) of Act 24 of 2011 GO] [s 69(1)(f) of Act 7 of 2010 GO] [s 59(1)(e) of Act 45 of 2003 GO] [s 116 of Act 32 of 2004 #4a GO] [s 13(1)(a) of Act 140 of 1993 GO] 1 Remuneration or settlement of debt [ 64C(4)] (b) where the amount constitutes remuneration in the hands of the shareholder or any connected person in relation to that shareholder or the settlement of any debt owed by the company to the shareholder or connected person; [ Checked against original text of Act 45 of 2003] [s 59(1)(e) of Act 45 of 2003 #2 GO] [s 116 of Act 32 of 2004 #5 GO] 2 Inadequate consideration [ 64C(4)] (ba) to the extent of any consideration received by that company in exchange for i. Cash or asset (i) the cash or asset distributed, transferred or otherwise disposed of; or ii. Other benefit granted (ii) any other benefit granted as contemplated in [s 64C(2)]; [ Checked against original text of Act 31 of 2005] [s 48(1)(c) of Act 31 of 2005 GO] [s 41(1)(d) of Act 32 of 2004 GO] 3 Return of capital [ 64C(4)] (c) to so much of any amount contemplated in [s 64C(2)(a), (b), (c), (d) or (g)] that (i) is distributed, transferred, released, relieved, paid, settled, used, applied, granted or made available for the benefit of any person; and (ii) reduces the market value of all the assets of the company to an amount that is less than the liabilities of the company; [ Checked against original text of Act 7 of 2010] 36 February 2014 Bsp Seminars
(d) (e) (f) (g) (h) 4 Interest-bearing loan [s 69(1)(g) of Act 7 of 2010 GO] [s 59(1)(f) of Act 45 of 2003 GO] [s 116 of Act 32 of 2004 #6 GO] [s 36(1) of Act 53 of 1999 GO] [ 64C(4)] to any loan granted in respect of which a rate of interest not less than the official rate of interest, as defined in paragraph 1 of the Seventh Schedule is payable by the shareholder or any connected person in relation to the shareholder; [ Checked against original text of Act 45 of 2003] [s 59(1)(g) of Act 45 of 2003 GO] [s 116 of Act 32 of 2004 #7 GO] [s 43(1)(a) of Act 59 of 2000 GO] [s 40 of Act 30 of 1998 GO] 5 Employees loan scheme [ 64C(4)] to any loan granted to the shareholder or any connected person in relation to the shareholder if the shareholder or connected person is an employee of the company or an associated institution contemplated in paragraph 1 of the Seventh Schedule in relation to the company and such loan is granted under, and in compliance with the normal terms and conditions of, a loan scheme generally available to employees of the company or of the associated institution who are not shareholders; [ Checked against original text of Act 45 of 2003] [s 59(1)(g) of Act 45 of 2003 #2 GO] [s 116 of Act 32 of 2004 #8 GO] [s 13(1)(b) of Act 140 of 1993 GO] 6 Loan or credit repaid [ 64C(4)] to any loan or credit granted to a shareholder of the company or any connected person in relation to the shareholder during any year of assessment of the company granting the loan or credit, if [ Checked against original text of Act 32 of 2004] [s 41(1)(e) of Act 32 of 2004 GO] [s 59(1)(h) of Act 45 of 2003 GO] [s 116 of Act 32 of 2004 #9 GO] i. Repaid or extinguished (i) such loan or credit is repaid or otherwise extinguished by not later than the end of the immediately succeeding year of assessment; [ Checked against original text of Act 21 of 1994: see below] ii. Not readvanced (ii) the amount thereof is not included in any subsequent loan or credit granted to the shareholder or any connected person in relation to the shareholder; and [ Checked against original text of Act 45 of 2003] [s 59(1)(i) of Act 45 of 2003 GO] [s 116 of Act 32 of 2004 #10 GO] iii. Sole transgression (iii) the provisions of this paragraph [s 64C(4)(f)] have not been applied in the case of the company in any previous year of assessment; [ Checked against original text of Act 21 of 1994] [s 25(1)(a) of Act 21 of 1994 GO] [Deleted.]; [ Checked against original text of Act 32 of 2004] [s 41(1)(f) of Act 32 of 2004 GO] [s 22(1) of Act 36 of 1996 GO] [s 25(1)(b) of Act 21 of 1994 GO] [Deleted.]; [ Checked against original text of Act 45 of 2003] 37 February 2014 Bsp Seminars