In terms of proviso (ii) to section 10(1)(k) of the Taxation Laws Amendment Bill ("TLAB"), the dividend exemption in section 10(1)(k) will cease to apply to any dividend received by or accrued to a person in respect of services rendered or to be rendered or in respect of or by virtue of employment or the holding of any office, other than a dividend received or accrued in respect of a restricted equity instrument as defined in section 8C held by that person or in respect of a share held by that person.

The ambit of this legislation is very narrow and will allow the dividend exemption in respect of shares where ordinary revenue will be triggered when the shares are disposed of by employees (or fully vested for their benefit).

Effectively the disallowance of the dividend exemption in section 10(1)(k) as contemplated in proviso (ii) to section 10(1)(k) of the Act will only apply to very specific scenarios, such as dividends distributed to beneficiaries of a discretionary trust in which such beneficiaries do not hold a trust interest which constitutes a "restricted equity instrument".

Proviso (ii) to section 10(1)(k) of the Act will come into operation on 1 March 2014 and applies in respect of amounts received or accrued on or after that date.