Earlier this year, National Treasury proposed a new regime to
prevent "disguised bonuses" being paid to employees in
the form of dividends on unvested or restricted employee share
scheme shares. National Treasury proposed that all such dividends
received on restricted shares would be treated as taxable income
and the company paying such dividend would potentially receive a
corresponding deduction.
This proposal gave rise to the submission of several comments,
which were duly addressed in the Response Document presented by the
South African Revenue Service ("SARS") and National
Treasury to the Standing Committee on Finance (the "Response
Document"). In general, it was submitted that the proposed
regime would be too broad, negatively impacting on bona
fide employee share schemes and BEE transactions, and leading
to inequity. The Response Document indicated that these comments on
the proposed regime were accepted by National Treasury and that the
proposal would be
