If a company makes payments to a related party of its shareholder, the question arises whether this is a dividend, or perhaps rather a donation? This affects the taxes to be declared to SARS. It may also affect whether an exemption applies. SARS recently issued Binding Private Ruling 423 on a set of facts involving this question.
A key distinction between a dividend and a donation lies in the linkage between the payment and shareholding in the company in the case of a dividend. A donation, on the other hand, is a gratuitous payment.
In this podcast episode, I discuss this issue with reference to a recent SARS ruling – Binding Private Ruling 423. You can listen to the episode by clicking on the link below.
