Dividends and CTC Flashcards
1
Q
Dividend definition (4)
A
- A dividend is an amount transferred or applied by a SA resident company
- it must be a payment for the benefit of a person (doesnt need to be a SH)
- or it can be a payment on behalf of any person.
- it must be in respect of a share in the company
2
Q
Dividend definition, specific inclusions (2)
A
- distributions in respect of a share
- repurchases of shares
3
Q
Dividend definition, exclusions (5)
A
- any amount, to the extent it results in the reduction of the company’s CTC
- an issue of capitalisation shares in the company
- an issue of shares as consideration for the shares bought back from the shareholders
- General repurchase on JSE complying with the JSE Limited Listing Requirements…
- asset distributed in specie in terms of s31(3) - transfer pricing adjustment
4
Q
Payments ‘in respect of a share’ will typically be: (4)
A
- A distribution of profits to the SH of the company
- A repurchase of shares issued by the company (to the extent it is funded by reserves - if funded by CTC, no dividend)
- A gratuitous payment by the company to a beneficiary of a trust, where the trust is a SH of the company, and the payment is made because of the trust’s shareholding.
- A gratuitous transfer of an asset to the SH of the company, or to someone connected to the SH, because of the shareholding, without formal declaration of a dividend.
5
Q
CTC definition parts (4)
A
- non-resident companies which become resident in SA on or after 1 January 2011
- any other company
- reduction of contributed tax capital
- proviso
6
Q
Summary of CTC
A
- Determine the balance of CTC at 1 January 2011 by taking Stated Capital and subtracting any amounts that were transferred there from retained earnings (so as to only be left with amounts received from SH)
- Add any consideration received from SH’s for shares issued on or after 1 January 2011.
- Subtract amounts of CTC already returned to SH
