Provisions to curb the abuse of corporate share buyback transactions to avoid paying capital gains tax have been relaxed. However, the days of tax-free share buyback arrangements largely remain a thing of the past. These transactions by South African companies will in future attract the same tax treatment as ordinary share sales to third parties. The initial provisions in the draft Taxation Laws Amendment Bill, published in July, were described as "overzealous and "too far-reaching". Following the initial publication, Treasury has invited comments and held workshops on the issue. Many of the comments have been taken into account in the drafting of the latest set of proposals.In the initial draft all dividends received by a company within 18 months prior to the sale of shares would have been re-characterised as proceeds for capital gains tax purposes. There was no distinction between ordinary dividends and dividends relating to a sale. This sledgehammer approach has now been softened...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.