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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part VIII : Dividends Tax

64J. STC Credit

 

 

(1)        A dividend paid by a company is not subject to the dividends tax to the extent that—

(a) the dividend does not exceed the STC credit of the company; and
(b) the company has by the date of payment notified the person to whom the dividend is paid of the amount by which the dividend reduces the STC credit of the company.

 

(2)        The STC credit of a company is an amount equal to the sum of—

(a) the amount by which the dividends accrued to that company as contemplated in section 64B(3) during the dividend cycle ending on the day immediately before the effective date, determined without regard to any dividend contemplated in section 64B(3A), exceed the dividends declared during that cycle by that company as contemplated in section 64B(2); and
(b) the dividends accrued to that company on or after the effective date-
(i) in respect of which the company received a notification from the person paying the dividend of the amount by which the dividend reduces the STC credit of the company that paid and declared that dividend; and
(ii) if the notification contemplated in subparagraph (i) was received no later than the date that the dividend is paid,

reduced by the dividends declared and paid by the company on or after the effective date.

 

(3) For purposes of subsections (1)(b) and (2)(b), the amount by which the STC credit of a company is reduced is deemed to be equal to an amount which bears to the dividend paid by that company to the person or company contemplated in those subsections the same ratio as the amount by which the STC credit of that company is reduced as a result of the payment of that dividend to all holders of shares in that company bears to the total dividend paid to all holders of shares.

[Subsection (3) amended by section 108(b) of Act No. 31 of 2013]

 

(4) In the determination of the STC credit of a company that is an insurer as defined in section 29A, the amount to be taken into account in terms of subsection (2)(b) in respect of dividends accrued to that company must be limited to dividends accrued on shares constituting an asset in the corporate fund of the company.

 

(5) The STC credit of a company on or after the third anniversary of the effective date is deemed to be nil.

 

(6) For the purposes of this section 'dividend' means a dividend contemplated in paragraph (a) of the definition of 'dividend' in section 64D.

 

(7) To the extent that any amount of dividends tax is not withheld by any person from the payment of any dividend by that person as a result of an inaccurate notification provided as contemplated in subsection (1)(b) by the company contemplated in that subsection, the company contemplated in that subsection is liable for that amount of dividends tax.