SECURITIES TRANSFER TAX

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What is it? 

Securities 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.

  • As the demand for liquid assets is increasing due to higher capital and liquidity requirements, most debt agreements involve the usage of collateral and it can take two forms, namely, (i) pledge (no transfer of beneficial ownership with no tax implications) and (ii) outright transfer (out and out cession of beneficial ownership with tax implications).
  • When an outright transfer of collateral is executed during a securities lending transaction, equity securities are subject to both income tax and securities transfer tax due to the fact that the outright transfer of collateral involves the actual transfer of beneficial ownership.
  • In terms of Section 8 of the Securities Transfer Tax Act, 2007 (Act No. 25 of 2007) it is that the Securities Transfer Tax will be exempted if the outright transfer of collateral has no income tax and securities transfer tax implications arise for collateral arrangements for the duration of up to 12 months. Similar to securities lending arrangements listed shares will not be allowed to be provided as collateral for longer than 12 months.
    • This comes into operation on 1 January 2016 and applies in respect of any collateral arrangement entered into on or after that date.

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.

What steps must I take?

Any person to whom an unlisted security is transferred must inform the company which issued that security of the transfer within 30 days of the date of that transfer.

An electronic declaration must be completed and sent for the transfer of every security on the SARS e-STT system.

If the securities transfer tax is not paid in full within the set period, interest will be charged at the set rate. A 10% penalty will also be applied, if any amount remains unpaid after the prescribed period or if the taxpayer fails to declare or makes an incorrect statement on the declaration form.

How to submit eSTT transaction details to SARS?

In order to complete and submit the eSTT transaction, register for eSTT purposes on eFiling.

When should it be paid?

  • Listed securities: Securities transfer tax must be paid by the 14th day of the month following the month during which transfers of listed securities occurred.
  • Unlisted securities: Securities transfer tax must be paid within two months from the end of the month in which the transfer of the unlisted security took place.

How should it be paid?

Securities transfer tax can only be paid by electronic payment using the SARS e-STT system. To get more information about the SARS e-STT system call the SARS Contact Centre on 0800 00 SARS(7277).

Or simply contact any of our helpful staff at 031 702 8112 or www.patc.co.za

  1. HOW TO SUBMIT E-STT TRANSACTION DETAILS TO SARS?

In order to complete and submit the eSTT transaction, register for eSTT purposes on eFiling.

REGISTRATION FOR E-STT 

  • You need to register for eSTT before transactions can be processed.
  • Registering for eSTT is simple:
    • Log on to the eFiling website, www.sarsefiling.co.za, and select “Services”;
    • On the left hand side, select “Other Services”;
    • Select “Manage Profiles” to set up eSTT;
    • Select “Create New Profile” and enter company name, then “Save”;
    • Return to “Other Services” and select “Setup”;
    • Select “eSTT and eStamps” and click register;
    • “eSTT and eStamps” will now appear under “Other Services”.

Top Tip: Registration for eFiling is required before transactions for eSTT can be processed

COMPLETING THE SECURITIES TRANSFER TAX DECLARATION

Just follow these simple steps to complete your declaration.

  • Under “Other Services”select “eSTT and eStamps”.
  • On the left hand side, select “New” and select whether the declaration is for listed or unlisted securities.
  • Complete the details as asked for on the screen, which will generate the eSTT return.
  • The return can now be filled in.
  • Additional information for the completion of the return:
    • Total value of transfers from the Member.
      • This is the total consideration for all listed securities purchased through or from a Member – enter the “Total” amount from the broker dealer accounting system (BDA) month end probability statistics (PSTATS) report.
    • Less: Total value of exempt transfers affected by the Member.
      • This is the total of all exemptions claimed by a Member– to enter an exemption you need to click on “Capture exemptions”, a screen with the 17 exemptions appears.
      • You then click on each applicable exemption you wish to claim and enter the amount of each exemption in the “Amount” block. Once you have completed all applicable exemptions, click on “OK” and you are returned to the screen containing the return.
    • This will now have the total of the exemptions claimed show on it as well as a sub total in the Total taxable transfers, which is the net amount of the total transfers less exemptions.
    • Total taxable transfers
      • This is the total of all other transfers of listed securities by a member on behalf of his clients, on which the member charged Securities Transfer Tax (STT), that are not transfers of listed securities from a client to a trust. If this is applicable, you will need to enter the total amount of the transfers in the block provided, (to calculate this amount, you total “all manual STT charges to clients“ from the “STT account” number and divide it by 0.25 and multiply it by 100). In essence apply 25%.
    • The “Total taxable amount” and “Tax on Total taxable amount” will be shown on the return.
  • Agree the “Tax on Total taxable amount” with the total shown on the “STT Account number 0011890” in BDA.
  •  Click on “declaration” and complete. After completion, click on “Save” and then “Submit”.
  1. HOW SHOULD IT BE PAID?

Securities transfer tax can only be paid by electronic payment using the SARS e-STT system.

SECURITIES TRANSFER TAX PAYMENT

After submitting the declaration, a screen will appear showing the STT amount to be paid.

Payment

Payment can be made by credit push.

eSTT Reference number 

A unique 10 character reference number will be created for each eSTT transaction.  The format will be ‘ST’ plus 7 alphanumeric characters, e.g. ST-Z5390OP.

 eSTT Receipt

After successful payment of the STT due, a receipt will be generated, that can be printed.

 

A status field will be shown on the eSTT receipt.

Documents with compliments of www.sars.gov.za

 

Or simply contact any of our helpful staff at 031 702 8112 or www.patc.co.za