Page 8 - P6 Slide Taxation - Lecture Day 4

EXAMPLE

1. On 1 april 2015, XDF ltd, a resident company, paid a dividend of R1,50 per share to its 1
million equity shareholders.

2. On 31 october 2015, adco holdings (pty) ltd was voluntarily liquidated and distributed R4
000 000 to its equity shareholders, of which R200 000 represented a reduction in adco
holdings (pty) ltd’s contributed tax capital.

3. On 15 december 2015, ABS (pty) ltd acquired 10% of its equity shares in terms of a share
buyback. ABS (pty) ltd paid the relevant shareholders R1 000 000 of which R100 000
represented a reduction in ABS (pty) ltd’s contributed tax capital.

4. On 15 february 2015, edco ltd acquired 10% of its equity shares in terms of a general
repurchase of its own securities as contemplated in s 5 of the JSE listings requirements. The

requirements of s 5 of the JSE listings requirements were complied with. Edco ltd paid the
relevant shareholders R1 000 000 of which R100 000 represented a reduction in edco ltd’s
contributed tax capital.

5. On 15 january 2015, DLM (pty) ltd, a resident company, paid an amount of R1 000 000 to
its sole shareholder's wife in respect of shares held by him in DLM (pty) ltd.

Determine whether the above amounts transferred or applied by the relevant companies,
qualifies as a dividend as defined.