Browsing by Author "Haupt, Estian"

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    Dividend cession and dividend distribution : the South African VAT implications
    (AOSIS, 2017) Haupt, Estian; Nel, Rudie
    An intuitive approach when considering the VAT implications of a dividend cession, which relates to a share, could be to classify it as a financial service and thus exempt from VAT. The fact that debt factoring, another cession transaction, has been noted as an exempt supply could support the intuitive approach in favour of a financial service. Pursuant to different interpretations and in an attempt to triangulate evidence, the meaning of ‘equity security’, ‘equity share’ and ‘security’ from three different tax acts were considered. Findings suggest a dividend cession is not a financial service and consequently a taxable supply for VAT purposes. This finding supports the normal tax view of National Treasury that a dividend cession constitutes an income stream independent from the underlying share and thus ordinary revenue. Findings provide guidance on the value of supply provisions and also enunciate that the subsequent dividend distribution in specie could result in VAT implications.
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    Dividend cession – investigating the South African tax implications
    (AOSIS, 2019) Haupt, Estian; Nel, Rudie
    Orientation: The South African tax legislation in respect of dividend cession. Research purpose: The objective of this article was to investigate the tax implications of a dividend cession for the cedent, cessionary and declaring company involved in the cession in order to provide guidance regarding the tax implications arising from such cession. Motivation for the study: The introduction of specific anti-avoidance provisions and amendments to tax legislation complicated the tax treatment of a dividend cession. Current literature and guidance contains a brief reference to the capital gains tax implications, while other guides deal exclusively with the dividends tax implications. Based on the lack of definitive guidance of other taxes resulting from a dividend cession, this investigation is considered necessary. Research approach/design and method: This study involved an interpretative analysis of the tax legislation and incorporates other literature on the research objective to describe the tax implications as a result of dividend cession. The mode of inquiry for this study is qualitative in nature and follows a doctrinal research method. Main findings: Findings suggest that although the classification of a dividend cession could be a usufruct (a real right), the practical tax implications with reference to dividends could not have been the intention. The submission is therefore that the tax implications should be as a personal right. Furthermore, the introduction of specific anti-avoidance provisions resulted in an instance of possible double taxation which was noted, which is submitted as a possible unintended consequence as a result of legislation amendments. Practical/managerial implications: The practical value of the article lies in the guidance in respect of the tax implications which taxpayers could consider in transactions pertaining to dividend cession. Contribution/value-add: Instance of double taxation documented and submitted as possible unintended consequence which could inform further debate on the topic.
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    An investigation of the tax implications of a cession of the right to receive a dividend
    (Stellenbosch : Stellenbosch University, 2017-03) Haupt, Estian; Nel, Rudie; Stellenbosch University. Faculty of Economic and Management Sciences. School of Accountancy.
    ENGLISH SUMMARY : In South Africa Dividends Tax was introduced with effect from 1 April 2012. The effect hereof was a shift away from a company-level tax to a shareholder-level tax. The introduction of Dividends Tax has, however, complicated the cession of a right to income even further. In order to prevent avoidance schemes that utilised the exemptions from Dividends Tax, in particular the exemption of South African resident companies, the legislature has enacted numerous amendments since 2011 directly dealing with the tax implications of the cession of a right to receive a dividend. There is currently a lack of definitive guidance on the tax implications of a cession of the right to receive a dividend, other than for purposes of Dividends Tax. The purpose of this research was to investigate the tax implications of the cession of a right to receive a dividend with reference to not only Dividends Tax, but also Securities Transfer Tax, Value-Added Tax, Donations Tax and Normal Tax (which includes Capital Gains Tax), and to attempt to formulate guidelines and provide appropriate guidance. In investigating the tax implications of a cession of a right to receive a dividend, it is necessary to consider the nature of a share and whether the type of right being ceded is a real right or a personal right, as the tax treatment in respect of different rights would differ. Based on the literature review conducted, it was found that the rights created as a result of the cession of the right to receive a dividend would depend on the circumstances of each case and although it is submitted as a personal right in principle, could constitute a real right when the parties intend to create a usufruct. This uncertainty further lends support for the necessity for definitive guidance to enable taxpayers to determine their tax obligations. The tax implications of the cession of a right to a dividend with regard to Securities Transfer Tax, Value-Added Tax, Donations Tax, Normal Tax (which includes Capital Gains Tax implications) and Dividends Tax was investigated and the findings concluded in a table which could be used in drafting the definitive guidance.