South Africa Tax Agency Posts Constitutional Court Judgment Clarifying Anti-Avoidance Rules for Preference Share Dividends

The South African Revenue Service April 22 posted online the Constitutional Court Judgment for Case No. CCT 72/24, clarifying anti-avoidance rules for preference share dividends. The taxpayers, a bank and its subsidiary, invested in preference shares and received tax-exempt dividends funded through downstream transactions. The Tax Agency issued additional assessments, asserting that downstream transactions converted taxable interest into tax-exempt income. The taxpayers argued that they were unaware of the transactions beyond their investments. The High Court set aside the assessments, and the Supreme Court of Appeal overturned that decision. The taxpayers appealed to the Constitutional Court, which dismissed the appeal, ...