STC & DWT
The taxpayer had a shareholders loan owing to him in the amount of R10million and there was a debit loan to a company that he was share holder in of R1million. (as a result a net credit loan of R9million).SARS deemed the debit loan as a deemed dividend and taxed the tax payer accordingly.
Strict application of Section 64C(2)g, is that if there is a debit loan it deemed to be a dividend.
Can SARS apply there mind and take into consideration the fact that the company owes him R10million and that the net effect is that the company owes him and that he has put money into the business and not taken any out, that could be seen to be "dividend" Any way that I can get around this?
Can a company be taxed twice? Once under the STC rules and once under DWT?Can the taxpayer deduct from the future dividend, the amount that was deemed to be a dividend by SARS, in order for the taxpayer not to pay the tax twice?
Deemed dividend – R1,000,000
Actual Dividend – R6,000,000
Less Deemed Dividend – R1,000,000
Taxable Dividend R5,000,000