We will address, in a series of articles, the South African tax
considerations arising for residents and non-residents in respect
of various corporate actions regarding South African listed
shares.
This article outlines certain relevant aspects in respect of
scrip dividends.
Scrip dividends take the form of capitalisation shares issued by
a company to its shareholders - in other words, the relevant
company issues shares to its shareholders rather than declaring and
making payment of a cash dividend.
RECEIPT/ACCRUAL OF SCRIP DIVIDENDS
The starting point for any person is to consider whether the
value of a scrip dividend falls within its "gross
income".
The definition of "gross income" in the Income Tax
Act, 1962 includes, in the case of a resident, the total amount, in
cash or otherwise, received by or accrued to such resident,
excluding receipts or accruals of a capital nature. In the case of
a non-resident, an additional requirement is that such amount
