Coronation Fund Managers on Monday declared a special dividend following the Constitutional Court’s ruling in its favour in a tax dispute with the South African Revenue Service (SARS).
The full impact of the tax matter was R794 million as at 31 March 2024.
The Cape Town-based asset manager paid the amount that SARS claimed it was owed for the 2012 to 2021 tax years. It also made provision for the remaining outstanding amount allegedly owed until the end of March this year.
The Constitutional Court’s decision, which was handed down in June, meant SARS had to pay back the money, which, with the provision for the remaining disputed amount, can be released as cash.
Having considered the impact of the reversal of the tax provision, Coronation’s board has approved and declared a non-recurring gross special cash dividend of 153 cents per ordinary share, Coronation said in a SENS announcement.
The special dividend is 122.4 cents per share net of South African dividend withholding tax of 20%.
It is subject to approval from the South African Reserve Bank. If approval is obtained by 2 September, the special dividend will be paid on 16 September.
Coronation’s tax dispute with SARS dated back to 2012. The central issue was whether the profits of its Irish business, Coronation Global Fund Managers (CGFM), should be included in the taxable income of Coronation Investment Management SA, its South African holding company, or whether CGFM is foreign business establishment (FBE) and therefore entitled to the tax exemption in section 9D of the Income Tax Act (ITA).
In a unanimous decision, the Constitutional Court held that CGFM met all the requirements of an FBE in terms of section 9D of the ITA. Thus, CGFM’s net income ought to have been exempted from tax.
Read: Constitutional Court’s ruling in tax dispute a relief for SA multinationals
