ARTICLE · 17 AUGUST 2017

Tax Proposals Affecting Share Disposals

Pieter van der Zwan & Associates

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Since the introduction of dividends tax in 2012, in particular the company to company exemption, taxpayers have employed a number of methods to convert taxable proceeds upon the sale of shares...

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Pieter Van Der Zwan

Since the introduction of dividends tax in 2012, in particular the company to company exemption, taxpayers have employed a number of methods to convert taxable proceeds upon the sale of shares into non-taxable dividends. The National Treasury has proposed a broad anti-avoidance provision that is likely to curb such arrangements but also impact many other share disposal transactions.

The National Treasury published the draft Taxation Laws Amendment Bill (TLAB) for 2017 on 19 July 2017. This article considers the proposed amendments affecting share disposals and related dividend stripping arrangements.

Current legislation

The disposal of shares and methods employed by taxpayers to convert taxable proceeds into nontaxable dividends have been a concern to SARS and the National Treasury over the past few years.

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