SARS ATTACKS PREFERENCE SHARE FUNDING

Wednesday, June 08, 2011
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Section 8E of the Act, in its present form, acts as an anti-avoidance mechanism in circumstances where dividends are issued on so-called “hybrid equity instruments”, typically preference shares which exhibit elements of both equity shares and loans. Dividends declared on these instruments are taxed as if they are interest in the hands of the holder but no deduction is allowed for the issuer.

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