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Do STC credits carry over from one dividend cycle to the next?

23 March 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Does overpayment of STC into one cycle carry-over into the next cycle automatically? I know that it does not consolidate to the assessed account. Does it automatically carry over to be used in next cycle?

A: We are not quite sure what you mean with "overpayment of STC”.   Our guidance assumes that the "overpayment of STC” that you refer to is in fact the STC credit.  If this assumption is wrong our guidance will not be appropriate and you are requested to submit another query. 

The last STC cycle ended on 31 March 2012. 

In terms of section 64J(2) the amount by which the dividends accrued to the company (as contemplated in section 64B(3) and without regard to any dividend contemplated in section 64B(3A)) during the dividend cycle ending on 31 March 2012, exceed the dividends declared during that cycle by that company (as contemplated in section 64B(2)) became the company’s STC credit (on 1 April 2012).  This is what section 64B(3) referred to as the "excess”. 

This STC credit is then reduced by dividends declared and paid by the company on or after 1 April 2012.  It may also be increased by dividends that accrued to the company on or after 1 April 2012 if and to the extent that the company received a notification from the person paying the dividend of the amount by which the dividend reduces the STC credit of the company that paid and declared that dividend. 

Please note that the STC credit of a company on or after the third anniversary of the effective date is deemed to be nil (i.e. 1 April 2015). 

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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