Page 80 - Companies & Dividend Tax
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Acquisition and Disposal of Shares
Share Dealers
• The term “share dealer” is not defined in the Income Tax
Act. The normal tax rules apply when shares are sold /
disposed of, or when dividends are received.
• If shares are disposed of as part of a profit-making scheme
where the shares are treated as trading stock, the proceeds
will be gross income. To be included in gross income the
receipt or accrual must not be of a capital nature. Normal
case law applies when an asset is realised/disposed of and
factors such as the intention of the taxpayer (CIR v Stott
(1928 AD)), whether the taxpayer had embarked on a
scheme of profit-making (CIR v Nussbaum (1996 A)),
whether the taxpayer had a change of intention, has treated
the asset as trading stock (Natal Estates Ltd v SIR (1975 A),
etc., will play a role.
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