SECURITIES TRANSFER TAX
21 Feb 2018
Levied at 0.25% of the value of shares transferred, the securities transfer tax (“STT”) is a tax often neglected and forgotten. Introduced in 2008, the tax is levied on the transfer of shares held in South African companies or the transfer of membership interests held South African close corporations. The issuing of a share is however not a “transfer” for purposes of the Securities Transfer Tax Act, nor the buying back / redemption / cancellation of a share by the company whose share it is itself where that company is in the process of having its existence terminated.
Due to being a tax which is often overlooked, taxpayers often neglect the administrative requirements linked to the tax too, not only in terms of their relative payment obligations towards the fiscus and doing so timeously, but also due to their failure to observe the relevant filing obligations linked to the requisite tax payments. Such administrative oversights may affect a future application by taxpayers for tax clearance certificates to be issued to them, and may also have a bearing on applications for the suspension of amounts of tax in dispute (STT or other) and ostensibly due to the Commissioner.
STT is ultimately borne by the purchaser of the shares being transferred, although a number of exemptions may apply. Primary among these are transfers of shares to which the so-called “group relief” provisions in the Income Tax Act apply, as well as a transfer of shares in property rich companies on which transfer duty is levied. Finally, in terms of the de minimis provision in section 8(1)(r), STT will also not apply to transfers of shares where the STT payable is less than R100. In other words, no STT is levied on a transfer of shares where the shares transferred have a value of less than R40,000.
It is important to note that STT is levied on the transfer of both listed and unlisted shares, and clients are therefore encouraged, in the interest of a clean tax administrative record, to take their STT obligations seriously.
 Section 2(1) of the Securities Transfer Tax Act, 25 of 2007
 See the definition of “transfer” in section 1 of the Securities Transfer Tax Act
 These requirements are contained in the Securities Transfer Tax Administration Act, 26 of 2007
 In terms of section 164(3)(b) of the Tax Administration Act, 28 of 2011, a taxpayers compliance history is to be considered where the Commissioner decides to suspend an amount of tax in dispute from being payable pending the outcome of that dispute.
 Section 7 of the Securities Transfer Tax Act
 Section 8
 58 of 1962
 Section 8(1)(a)
 Section 8(1)(n)