Q: My client paid STC on a debit loan outstanding
since 28/02/2011, which now lay as an STC credit for the client at SARS. Is there a possibility to claim the credit
back before April 2015?
A: The amount of STC paid on a debit loan in terms of section 64C(2) of the
Income Tax Act (ITA) would only be added to the STC opening balance in terms of
section 64J of the ITA if the loan had been repaid before 1 April 2012 as per
section 64C(5) of the ITA. If it was not repaid then the low or no interest on
the loan will not after 1 April 2012 constitute a deemed dividend in terms of
section 64E(4)(e) of the ITA. Furthermore, as the loan itself was a dividend
subject to STC, a distribution of the loan is also exempt in terms of section
If the loan was
repaid before 1 April 2012, then the amount would have been deemed a dividend
received (i.e. STC credit) which in terms of section 64J(1) can only be
utilised by paying a dividend to a shareholder and the recipient is sent the
relevant notification. This must happen before 31 March 2015 otherwise the STC
credit will be forfeited.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.
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