STC CREDITS HAVE EXPIRED. NOW WHAT?

STC credits expired on 31 March 2015.

As you may know, any STC credits which companies calculated as at 31 March 2012 (i.e. the day before dividends tax came into effect) could be carried over into the newly introduced dividends tax regime. These STC credits could be used by the company for a period of three years from 31 March 2012 to reduce any dividends tax paid by a company, to the extent that the dividend does not exceed the STC credit of the company and the company has, by the date of payment of the dividend, notified the recipient of the amount by which the dividend reduces the STC credit of the company.

Companies should be aware that the expiry date for the use of any unused STC credits was 31 March 2015. Now, the dividends tax regime is in full force and effect and companies will no longer be able to set off STC credits against dividends in order to reduce the dividends tax liability arising from dividends paid to shareholders.

Do you pay service fees to a company, trust or other entity outside South Africa?

As of the 2014 year of assessment, non-resident companies, trusts and other juristic entities are required to submit a tax return in South Africa where those non-resident entities derived service income from a source in South Africa. This requirement became effective for 2014 tax years of assessment.

Tax returns must be filed within 12 months from the date on which that non-resident entity’s financial year ends. Non-resident entities would need to register with the South African Revenue Service in order to obtain a tax reference number and to submit such returns.

Queries?

Trudie Rohlandt: (trudier@octagon.za.com)