The company advised linked unitholders in its audited condensed results for the year ended 31 March 2013, that in order to report a more predictable and stable income stream for investors, abnormal sales commission and other non-recurring income earned less expenses would be paid as a separately identified special distribution in the financial year in which such non-recurring income is earned.

In line with the above, the board of directors of Vukile has declared a special distribution of non-recurring income of 13.83060 cents per linked unit out of the special distributable income.

Linked unitholders are advised that the tax treatment of the special distribution is identical to that of any other distribution of the company given that each such distribution would be considered a “qualifying distribution” under REIT legislation, more fully detailed below. 

Vukile was granted REIT status by the JSE Limited with effect from 1 April 2013 in line with the REIT structure as provided for in the Income Tax Act, No. 58 of 1962, as amended and section 13 of the JSE Listings Requirements.

The REIT structure is a tax regime that allows a REIT to deduct qualifying distributions paid to investors, in determining its taxable income.

The special distribution meets the requirements of a "qualifying distribution" for the purposes of section 25BB of the Income Tax Act with the result that:
- qualifying distributions received by resident Vukile linked unitholders must be included in the gross income of such linked unitholders (as a non-exempt dividend in terms of section 10(1)(k)(aa) of the Income Tax Act), with the effect that the qualifying distribution is taxable as income in the hands of the Vukile linked unitholder. These qualifying distributions are however exempt from dividend withholding tax;
- qualifying distributions received by non-resident Vukile linked unitholders will not be taxable as income and instead will be treated as ordinary dividends but which are exempt in terms of the usual dividend exemptions per section 10(1)(k) of the Income Tax Act. It should be noted that until 31 December 2013 qualifying distributions received by non-residents are not subject to dividend withholding tax. From 1 January 2014, any qualifying distribution will be subject to dividends tax.