The concept of a “collateral arrangement” was
inserted into South African tax legislation and came into force on
1 January 2016. The provisions contained in the Income Tax Act,
1962 (“Act”) and the Securities
Transfer Tax Act, 2007 (”STT Act”)
effectively provide for income tax and securities transfer tax
(“STT”) relief in respect of
collateral arrangements, ie. where an outright transfer of
collateral of, inter alia, South African equities is
executed in respect of an amount owed.
This dispensation was provided in addition to that provided for
in respect of securities lending arrangements and, in terms of the
2015 Explanatory Memorandum on the Taxation Laws Amendment Bill was
introduced for the purposes of:
