SECURITIES TRANSFER TAX
What is it?
Security Transfer Tax is levied on every transfer of a security and was implemented from 1 July 2008 under the Securities Transfer Tax Act, No. 25 of 2007, together with the Securities Transfer Tax Administration Act, No. 26 of 2007.
A security means any:
- share or depository in a company; or
- member’s interest in a close corporation (CC);
Top Tip: “Any right or entitlement to receive any distribution from a company or close corporation” has been removed from the definition of a “security” with effect from 1 April 2012.
Securities transfer tax is levied for:
- every transfer of any security issued by:
- a close corporation or company incorporated, established or formed inside South Africa; or
- a company incorporated, established or formed outside South Africa and listed on an exchange
- any reallocation of securities from a member’s bank restricted stock account or a member’s unrestricted and security restricted stock account to a member’s general restricted stock account.
Securities tax is levied at the rate of 0,25%.
Who is it for?
Securities transfer tax applies to the purchase and transfers of listed and unlisted securities.
- When listed securities are bought or transferred through or from a member or participant, the member or participant is liable for the tax. That member or participant may however, recover the tax payable from the persons to whom the securities were transferred.
- The transfer of any other listed security will result in the person, to whom the security is transferred, being liable for the tax. The tax must, however, be paid through the member or participant holding the security in custody. Should this not be the case, the tax must be paid through the company that issued the listed security.
- With the transfer of an unlisted security, the company which issued the unlisted security is liable for the tax. The company may however, recover the tax payable from the person to whom the security is transferred.