An investigation of the tax implications of a cession of the right to receive a dividend

[摘要] ENGLISH SUMMARY : In South Africa Dividends Tax was introduced with effect from 1 April 2012. The effect hereof was a shift away from a company-level tax to a shareholder-level tax. The introduction of Dividends Tax has, however, complicated the cession of a right to income even further. In order to prevent avoidance schemes that utilised the exemptions from Dividends Tax, in particular the exemption of South African resident companies, the legislature has enacted numerous amendments since 2011 directly dealing with the tax implications of the cession of a right to receive a dividend. There is currently a lack of definitive guidance on the tax implications of a cession of the right to receive a dividend, other than for purposes of Dividends Tax. The purpose of this research was to investigate the tax implications of the cession of a right to receive a dividend with reference to not only Dividends Tax, but also Securities Transfer Tax, Value-Added Tax, Donations Tax and Normal Tax (which includes Capital Gains Tax), and to attempt to formulate guidelines and provide appropriate guidance. In investigating the tax implications of a cession of a right to receive a dividend, it is necessary to consider the nature of a share and whether the type of right being ceded is a real right or a personal right, as the tax treatment in respect of different rights would differ. Based on the literature review conducted, it was found that the rights created as a result of the cession of the right to receive a dividend would depend on thecircumstances of each case and although it is submitted as a personal right in principle, could constitute a real right when the parties intend to create a usufruct. This uncertainty further lends support for the necessity for definitive guidance to enable taxpayers to determine their tax obligations. The tax implications of the cession of a right to a dividend with regard to Securities Transfer Tax, Value-Added Tax, Donations Tax, Normal Tax (which includes Capital Gains Tax implications) and Dividends Tax was investigated and the findings concluded in a table which could be used in drafting the definitive guidance.

[发布机构] Stellenbosch University