1667. Commencement of Securities Transfer Tax
October 2008 – Issue 110
With effect from 1 July 2008, a new Securities Transfer Tax ("STT") replaced the previous Stamp Duty and Uncertificated Securities Tax ("UST") which were payable on the transfer of unlisted and listed shares respectively.
The new position
STT at the rate of 0,25% is now payable in respect of every "transfer" of any "security" issued by a:· company incorporated in South Africa; · close corporation; or · company incorporated outside South Africa and listed on the JSE Securities Exchange.
For this purpose:· "security" means any share or depository receipt in a company, any member's interest in a close corporation and any right or entitlement to receive any distribution from a company or close corporation (excluding the debt portion in respect of a share linked to a debenture); · "transfer" includes the transfer, sale, assignment or cession, or disposal in any other manner, of a security or the cancellation or redemption of a security, but does not include any event that does not result in a change in beneficial ownership, the issue of a security or a cancellation or redemption of a security if the company which issued the security is being liquidated or de-registered. Listed shares
Where listed shares are purchased through or from a JSE stockbroker, STT is payable on the purchase consideration. It is payable by the stockbroker who may recover it from the purchaser.
In an off-market transaction where the transfer of the listed shares is effected by a Central Securities Depository Participant ("CSDP"), STT is payable on the declared consideration. If no consideration is declared or if the declared consideration is less than the lowest JSE traded price of the share on the date of the transaction, STT is payable on the closing price on that date. The STT is payable by the CSDP which may recover it from the transferee.
In any other case, including where the shares remain registered in the name of a nominee, STT is payable by the purchaser on the declared consideration. If no consideration is declared or if the declared consideration is less than the lowest JSE traded price on the date of the transaction, STT is payable on the closing price on that date. The STT is payable by the purchaser, through the CSDP or stockbroker holding the listed shares in custody.Unlisted shares and member’s interests
STT is payable on the higher of the consideration and the market value of the shares or member's interests. It is payable by the company or close corporation the shares or member's interests of which are transferred, but may be recovered from the transferee.Exemptions
STT is not payable in respect of transfers of securities:· in terms of a transaction falling within sections 42 to 47 of the Income Tax Act; · under qualifying lending arrangements; · which are participatory interests in a regulated collective investment scheme; · to trust beneficiaries, heirs or legatees; or · to other specified exempt transferees. Payments, interest and penalty
In the case of listed shares, the CSDP or stockbroker in question must pay the STT to SARS by the 14th day of the following month.
For unlisted shares and member's interests, the relevant company or close corporation must pay the STT to SARS within two months from the date of the transfer.
Interest at the prescribed rate (currently 15%) is payable on late payments of STT. In addition a penalty of 10% of the unpaid STT is payable.
Securities Transfer Tax Act No. 25 of 2007
Stamp Duties Act No. 77 of 1968
Uncertificated Securities Tax Act No.31 of 1998