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Securities Transfer Tax Act, 2007 (Act No. 25 of 2007)

8. Exemptions

 

(1) The tax is not payable in respect of a transfer of a security—
(a) if the security is transferred to a person—
(i) in terms of an asset-for-share transaction referred to in section 42 of the Income Tax Act;
(iA) in terms of a substitutive share-for-share transaction referred to in section 43 of the Income Tax Act or in terms of paragraph 11(2)(l) of the Eighth Schedule to the Income Tax Act;
(ii) in terms of an amalgamation transaction referred to in section 44 of the Income Tax Act;
(iii) in terms of an intra-group transaction referred to in section 45 of the Income Tax Act;
(iv) in terms of an unbundling transaction referred to in section 46 of the Income Tax Act;
(v) in terms of a liquidation distribution referred to in section 47 of the Income Tax Act; or
(vi) in terms of any transaction which would have constituted a transaction or distribution referred to—
(A) [Section 8(1)(a)(vi)(A) deleted by the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010)]
(B) in subparagraph (i) or (ii) regardless of the market value of the asset disposed of in exchange for that security; or
(C) in subparagraphs (i) to (v) regardless of whether or not that person acquired that security as a capital asset or as trading stock,

where the public officer of the relevant company has made a sworn affidavit or solemn declaration that the acquisition of that security complies with the provisions of this paragraph;

(b) if the transfer is from a lender to a borrower, or vice versa, in terms of alending arrangement and the person to whom that security has been transferred has certified to the member or participant that the change is in terms of that lending arrangement;

[Section 8(1)(b) amended by section 138(1)(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

(c) if the transfer is from a pension fund to another pension fund both of which are registered under the Pension Funds Act, 1956 (Act No. 24 of 1956), and that change is made in pursuance of a scheme referred to in section 14(1) of that Act;
(d) if that security is transferred to a public benefit organisation which is exempt from income tax in terms of section 10(1)(cN) of the Income Tax Act, if the tax thereon would, but for this exemption, be legally payable and borne by that public benefit organisation;

[Section 8(1)(d) substituted by section 57 of the Taxation Laws Amendment Act, 2021 (Act No. 20 of 2021), Notice No. 770, GG45787, dated 19 January 2022]

(e) if that security is transferred to an institution, board or body, which is exempt from income tax in terms of section 10(1)(cA)(i) of the Income Tax Act, and which has as its sole or principal object the carrying on of any public benefit activity referred to in section 30 of that Act, if the tax thereon would be legally payable and borne by that institution, board or body;
(f) to the extent that that security is a participatory interest in a collective investment scheme regulated in terms of the Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002);
(g) if that security is transferred to a beneficiary entitled thereto under a trust created in accordance with a will;
(h) if the person to whom that security is transferred is an heir or a legatee who has acquired that security ab intestatio or by way of testamentary succession or as a result of a redistribution of the assets of a deceased estate in the process of liquidation;
(i) if the person to whom that security is transferred is a spouse in a marriage in community of property who acquires an undivided half-share in that security by operation of law by virtue of the contraction of such marriage, if that security was acquired by the other spouse prior to the date of that marriage;
(j) if the person to whom that security is transferred is a surviving or divorced spouse who acquires a security from his or her deceased or divorced spouse where that security is transferred to that surviving or divorced spouse as a result of the death of his or her spouse or dissolution of their marriage or union;
(k) transferred to any sphere of the Government of the Republic or to any sphere of the government of any other country;
(l) transferred to any "water services provider" as defined in section 1 of the Income Tax Act;
(m) [Section 8(1)(m) deleted by the Taxation Amendment Act, 2011 (Act No. 24 of 2011)]
(n) if that security is an unlisted security which in terms of the Transfer Duty Act, 1949 (Act No. 40 of 1949), constitutes a transaction for the acquisition of property that is subject to transfer duty or constitutes a supply of goods that is subject to value-added tax under the Value-Added Tax Act, 1991 (Act No. 89 of 1991);

[Section 8(1)(n) substituted by section 77(a) of the Taxation Laws Amendment Act, 2019 (Act No. 34 of 2019), GG42951, dated 15 January 2020]

(o) [Section 8(1)(o) deleted by section 77(b) of the Taxation Laws Amendment Act, 2019 (Act No. 34 of 2019), GG42951, dated 15 January 2020]
(p) transferred to any traditional council as referred to in the Communal Land Rights Act, 2004 (Act No. 11 of 2004), on or before a date that may be determined by the Minister by notice in the Gazette;
(q) if the person to whom that security is transferred is a member who acquires that security and allocates it to that member's bank restricted stock account or that member's unrestricted and security restricted stock account; or
(r) if that security was transferred during a month in respect of which—
(i) in the case of an unlisted security, the company which issued that security; or
(ii) in the case of a listed security, the relevant member, relevant participant or the company that issued that security where that security is not held in custody by either a member or a participant,

would have had to pay tax of less than R100 to the Commissioner;

(s) if that security constitutes a share in a headquarter company as defined in section 1 of the Income Tax Act, 1962 (Act No. 58 of 1962); or
(t) if that security constitutes a share in a REIT as defined in section 1 of the Income Tax Act;

[Section 8(1)(t) amended by section 138(1)(b) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

(u) if the transfer is from a transferor to a transferee, or vice versa, in terms of a collateral arrangement and the person to whom that security has been transferred has certified to the member or participant that the change is in terms of that collateral arrangement; or

[Section 8(1)(u) inserted by section 138(1)(c) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

(v) if that security is transferred to a bank, if that bank is not resident in the Republic and is entrusted by the Government of a territory outside the Republic with the custody of the principal foreign exchange reserves of that territory;

[Section 8(1)(v) inserted by section 77(c) of the Taxation Laws Amendment Act, 2019 (Act No. 34 of 2019), GG42951, dated 15 January 2020]

(w) if that security is transferred to any multinational organisation providing foreign donor funding in terms of an official development assistance agreement that is binding in terms of section 231(3) of the Constitution of the Republic of South Africa Act, 1996, to the extent—
(i) the security is transferred pursuant to the organisation supplying goods or rendering services in relation to projects that are approved by the Minister; or
(ii) that agreement provides that the transfer of that security to that organisation must be exempt; or

[Section 8(1)(w) inserted by section 68 of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021]

(x) if that security is transferred to—
(i) the African Development Bank established on 10 September 1964;
(ii) the World Bank established on 27 December 1945 including the International Bank for Reconstruction and Development and International Development Association;
(iii) the International Monetary Fund established on 27 December 1945;
(iv) the African Import and Export Bank established on 8 May 1993;
(v) the European Investment Bank established on 1 January 1958 under the Treaty of Rome; or
(vi) the New Development Bank established on 15 July 2014.

[Section 8(1)(x) inserted by section 68 of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021]

 

(2) The Commissioner may for the purposes of this section prescribe any declaration to be submitted by any person to the participant or member in respect of any security referred to in subsection (1).

[Section 8(2) substituted by section 15 of Notice No. 16, GG 42169, dated 17 January 2019 (Tax Administration Laws Amendment Act, 2018 (Act No. 22 of 2018)]

 

(3) No exemption referred to in subsection (1) applies in respect of any transfer of the security referred to in that subsection, unless there is lodged with a participant or member a declaration referred to in subsection (2) in respect of that security.

[Section 8(3) substituted by section 15 of Notice No. 16, GG 42169, dated 17 January 2019 (Tax Administration Laws Amendment Act, 2018 (Act No. 22 of 2018)]