Contributed tax capital (“CTC”) is
a term that is defined in the Income Tax Act, 1962 (the
“Act”) and that represents a notional
amount that is available to be transferred to shareholders,
typically as a capital distribution, in respect of the particular
class of share from which it arose.
The CTC of a class of share issued by a company is broadly
determined as the consideration for the issue of the shares in that
particular class, less certain determined repayments or transfers
of CTC to shareholders.
The definition of CTC has undergone certain refinements in the
previous and current legislative amendment cycle in an attempt to
curb avoidance concerns of National Treasury. These refinements are
contained in the Taxation Laws Amendment Act, 2021
(“TLAA”) and the draft Taxation Laws
Amendment Bill, 2022 (“ DTLAB”).
