Alpha Holdings Ltd (a resident company) declared a dividend in specie consisting of trading assets worth R500,000 to its shareholder, Beta Ltd, which is also a resident company and forms part of the same group of companies (as defined in s41). No written declaration or undertaking was submitted. Which of the following statements is most accurate regarding the dividends tax implications?

Question

Accepted Answer

The dividend in specie is exempt because both companies form part of the same group, regardless of declarations.

Answer

The dividend in specie is exempt only if a written declaration is submitted before payment.

Answer

The dividend in specie is taxable at 20% because no written declaration was submitted.

Answer

The dividend in specie is taxable, but the rate is reduced under a DTA.

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Alpha Holdings Ltd (a resident company) declared a dividend in specie consisting...

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