You are here:
Home… Tax Types… Securities Transfer Tax (STT)
Securities Transfer Tax (STT).
What is Securities Transfer Tax?
It is a tax levied on every transfer of a security. A security in essence means any–
(a) share in a company;
(b) member’s interest in a close corporation; or
(c) any right or entitlement to receive any distribution from a company or close corporation.
Only securities issued by–
(a) companies incorporated, established or formed inside the Republic; and
(b) companies incorporated, established or formed outside the Republic, which are listed on a South African exchange, are taxable.
Back to top
Why was the Securities Transfer Tax introduced?
The Stamp Duties Act, 1968, catered for the registration of transfer of unlisted securities whereas the Uncertificated Securities Tax Act, 1998, catered for the change in beneficial ownership of listed securities. The difference in events that gave rise to the duty and tax payable resulted in anomalies and also complicated the administration of the tax and duties.
In view of the above the Securities Transfer Tax Act, 2007 (Act No. 25 of 2007) was introduced to replace stamp duties and UST on securities with a single tax in respect of any transfer of listed and unlisted securities. The Securities Transfer Tax Act ensures that the rules governing both listed and unlisted securities are consistent.
Back to top
What is the implementation date of Securities Transfer Tax?
The Securities Transfer Tax Act is effective from 1 July 2008 and applies to the transfer of listed and unlisted securities on or after 1 July 2008.
Back to top
What is the rate of Securities Transfer Tax?
The tax rate is 0, 25%, to be applied to the taxable amount in respect of any transfer of a security.
Back to top
What is the taxable amount on which Securities Transfer Tax is payable?
(a) Purchase of listed securities through the agency of or from a member:
- The consideration for which the security is purchased.
(b) Transfer of listed securities effected by a participant:
- The amount of the consideration for the security declared by the person who acquired that security; or
- The market value of the security determined according to a specific rule if the consideration declared is less than the market value.
(c) Transfer of listed securities in any other manner:
- The amount of the consideration for the security declared by the person who acquired that security; or
- The market value of the security determined according to a specific rule if the consideration declared is less than the market value.
(d) Transfer of unlisted securities
- The amount or market value of the consideration for the transfer of the security.
- If there is no consideration for the transfer of the security or the consideration is less than the market value of the security, the market value of the security.
- If the security is cancelled or redeemed, the market value of that security immediately before the cancellation or redemption.
Back to top
Who is liable to pay Securities Transfer Tax?
(a) Purchase of listed securities through or from a member:
-
The member is liable for the payment of the tax to SARS.
-
The member may recover the tax payable from the persons to whom the securities are transferred or from the person that cancels or redeems the securities.
(b) Transfer of listed securities effected by a participant:
-
The participant is liable for the payment of the tax to SARS.
-
The participant may recover the tax payable from the persons to whom the securities are transferred or from the person that cancels or redeems the securities.
(c) Transfer of any other listed securities:
-
The person to whom the listed security is transferred is liable for the tax payable.
-
The tax must be paid through the member or participant holding the listed security in custody, or in the case where the listed security is not held in custody by either a member or participant, through the company that issued the listed security.
(d) Transfer of unlisted securities:
Back to top
When is Securities Transfer Tax payable on the transfer of listed securities?
Securities Transfer Tax must be paid by the 14th day of the month following the month during which transfers of listed securities occurred.
Back to top
When is Securities Transfer Tax payable on the transfer of unlisted securities?
Securities Transfer Tax which becomes payable during a month in respect of any transfer of an unlisted security must be paid by the Company, which issued that security, to the Commissioner within two months from the end of that month.
Back to top
How is Securities Transfer Tax payable?
(a) An electronic payment must be made by using the SARS e-STT system.
(b) In the case of the transfer of listed securities the member or participant must by the 14th day of the month following the month during which transfers took place submit a declaration electronically, in the form and manner as the Commissioner may determine and containing the information prescribed by the Commissioner, stating the amount of tax payable by that member or participant.
Revenue stamps or an impressed stamp may not be used to pay Securities Transfer Tax. The only method of payment will be through the SARS e-STT system.
(c) In the case of the transfer of unlisted securities the company that issued the securities must by the end of the second month after the month during which the transfers took place submit a declaration electronically, in the form and manner as the Commissioner may determine and containing the information prescribed by the Commissioner, stating the amount of tax payable.
Revenue stamps or an impressed stamp may not be used to pay Securities Transfer Tax. The only method of payment will be through the SARS e-STT system
Back to top
Which exemptions apply?
Exemptions are granted for the transfer of a security–
(a) to a person—
(i) in terms of an asset-for-share transaction referred to in section 42 of 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 respect of any transaction which would have constituted a transaction or distribution referred to—
(A) in (i) to (v) regardless of whether or not an election has been made for the purposes of the relevant section to apply;
(B) in (i) or (ii) regardless of the market value of the asset disposed of in exchange for that security; or
(C) in (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) from a lender to a borrower, or vice versa, in terms of a lending arrangement and the person to whom that security has been transferred has certified to the participant that the change is in terms of that lending arrangement;
(c) from a pension fund to another pension fund, both registered under the Pension Funds Act and is made in pursuance of a scheme as referred to in section 14(1) of that Act;
(d) 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 have been legally payable and borne by that public benefit organisation;
(e) 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 have been legally payable and borne by that institution, board or body;
(f) which is a participatory interest in a collective investment scheme regulated in terms of the Collective Investment Schemes Control Act;
(g) to a beneficiary entitled thereto under a trust created in accordance with a will;
(h) to 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) to 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 before the date of that marriage;
(j) to a surviving or divorced spouse who acquires that security from his or her deceased or divorced spouse as a result of the death of his or her spouse or dissolution of their marriage or union;
(k) to any sphere of the Government of the Republic or to any sphere of the government of any other country;
(l) to any ‘‘water services provider’’ as defined in section 1 of the Income Tax Act;
(m) to any ‘‘regional electricity distributor’’ as defined in section 1 of the Income Tax Act;
(n) which in terms of the Transfer Duty Act constitutes a transaction for the acquisition of property that is subject to transfer duty;
(o) which is a share in a “share block company” as defined in section 1 of the Share Block Control Act, which confers a right to or an interest in the use of immovable property;
(p) to any “traditional council” as defined in the Communal Land Rights Act; or
(q) to a member who has purchased that security for the account and benefit of that person.
(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 the 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.
Back to top
What is the notification requirement for the transfer of unlisted securities?
Any person to whom an unlisted security is transferred must inform the company which issued that security of the transfer within a period of 30 days as from the date of that transfer.
Back to top
When will interest be charged?
If the Securities Transfer Tax is not paid in full within the prescribed period, interest will be imposed at the rate prescribed for tax purposes on the balance of the tax outstanding, calculated from the day following the last date prescribed for payment to the date of payment to SARS.
Back to top
When will penalty on default be charged?
If any tax remains unpaid after the last date prescribed for payment, a penalty of 10% of that unpaid tax becomes payable to SARS. The Commissioner may, having regard to the circumstances of the case, remit the penalty or a portion of it.
Back to top
Is interest or penalty recoverable by the person who paid it to SARS?
(a) Listed securities:
A member or participant may recover the amount of interest or penalty payable to SARS from the person to whom the listed security is transferred; or who cancels or redeems the listed security, to the extent that the action or inaction of that person resulted in the interest or penalty.
(b) Unlisted securities:
The company which issued the security may recover the amount of the interest or penalty payable to SARS from the person to whom the security is transferred, to the extent the action or inaction of that person resulted in the interest or penalty.
Back to top
What must I do to get a refund on an overpayment of Securities Transfer Tax?
All applications for refunds must be sent to your local SARS office. The local SARS office will arrange for the processing of the application for a refund.
Back to top
For what period must records be kept?
Any company which issued unlisted securities and any member, participant or person to whom a listed security is transferred must keep for a period of five years records of every transfer to enable them to observe the requirements of the Securities Transfer Tax Act and to enable the Commissioner to be satisfied that those requirements have been observed.
Back to top
What is the meaning of some of the words used in relation to the Securities Transfer Tax?
Company means any corporation, or company incorporated, established or formed by or under any law.
Listed security means any security that is listed on an exchange.
Member means any person who is an ‘‘authorised user’’ as defined in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004), providing such security services as the rules of the exchange permit including services in respect of the buying and selling of a listed security.
Participant means a person that holds in custody and administers a listed security or an interest in a listed security and that has been accepted in terms of section 34 of the Securities Services Act, 2004 (Act No. 36 of 2004), by a central securities depository as a participant in that central securities depository.
Person includes—
(a) any sphere of the Government of the Republic;
(b) any body of persons (incorporated or unincorporated);
(c) the estate of any deceased or insolvent person;
(d) any trust fund; and
(e) any portfolio comprised in any collective investment scheme in securities contemplated in Part IV of the Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002).
Security means—
(a) any share or depository receipt in a company;
(b) any member’s interest in a close corporation; or
(c) 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 that security, but does not include—
(a) any event that does not result in a change in beneficial ownership;
(b) any issue of a security; or
(c) a cancellation or redemption of a security if the company which issued the security is being wound up, liquidated or deregistered or its corporate existence is being finally terminated.
Unlisted security means any security other than a listed security.
Back to top
Where can I get more information on the Securities Transfer Tax legislation?
-
Securities Transfer Tax Act of 2007
-
Securities Transfer Tax Administration Act of 2007
-
Explanatory Memorandum on the Securities Transfer Tax Bill
-
Explanatory Memorandum on the Securities Transfer Tax Administration Bill
-
Section 27 of the Taxation Laws Second Amendment Act of 2008
-
Sections 126 and 127 of the Revenue Laws Amendment Act of 2008
-
Section 49 of the Revenue Laws Second Amendment Act of 2008
Back to top
Where can I get more information on the SARS e-STT system?
E-Stamps Call Centre for general inquiries – 0860 709 709
Call Centre relating to all tax-related queries – 0860 12 12 18
Back to top |
e-Mail this page |
Print this page
|
