n Business Tax and Company Law Quarterly - Dividends tax - 9 months down the line

Volume 3, Issue 4
  • ISSN : 2219-1585


Now that the new dividend tax is in full swing, and after further amendments have been tabled in the Taxation Laws Amendment Bill B34 of 2012, an article on some of the relevant aspects of the legislation and practical application needs to be written.

The concept of 'beneficial owner' is a difficult one. The term is defined in the Act but is subject to interpretation. The beneficial owner may be the person other than the registered shareholder. The relevance of the identity of the beneficial owner is important because this is the person liable for the dividend tax if payment is not withheld by the company declaring or paying the dividend.
Many draft versions of the dividend tax legislation have attempted to clarify the timing of the dividend tax trigger. The legislation has settled with a deemed 'payment' date which differentiates between listed and unlisted companies.
STC credits are available for utilisation up until dividends declared on 1 April 2015. The rules relating to the utilisation of the STC credits are relatively complex and are dealt with by practical example.
The rules relating to related-party interest-free loans being the subject of a dividend tax are vastly different to the STC rules associated with related-party interest-free loans. The differentiating feature is that the tax is calculated on a deemed market-related interest rate and not on the value of the loan.
The final part of the article deals with the concept of a 'regulated intermediary' ('RI'). This classification of a dividend recipient is exempt from the dividend tax. The RI is also the entity liable to withhold the dividend tax. Accordingly, the identification of an RI is important for the declarer and payer of the dividend.

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