What is Dividends Tax?
Dividends Tax is a tax charged at 15% on shareholders when dividends are paid to them. Under normal circumstances Dividends Tax is withheld from the shareholders by a withholding agent (by the company paying the dividend/where a regulated intermediary is involved). A Dividend is in essence any payment made by a company to a shareholder for a share in their company (this excludes the return of contributed tax capital).
It is triggered by the payment of a dividend by:
Any Foreign Company (with shares listed on the JSE); or
Any South African tax resident company
Read more about dividends tax on the SARS website: http://www.sars.gov.za/TaxTypes/DT/Pages/default.aspx
When is Dividend Tax due?
Payment of Dividends Tax is due on the last working day of the month after declaration of dividend (not a Saturday, Sunday or Public holiday) and should be accompanied by a return (DTR01/02). Penalties and interest may be levied for late payments of dividends tax or the late submission of dividends tax returns.
The Latest News
Legal changes were recently made to Dividends Tax and came into effect on the 26 April 2014.
The following legal changes are provided by www.sars.co.za:
The maximum rate of tax for qualifying oil and gas profits will reduce from 5% to 0% (which was the rate applicable under Secondary Tax on Companies (STC))
New payment date rules will apply for both listed and unlisted companies. For listed companies, dividends tax is now triggered by the actual payment only, whereas for unlisted companies the dividends tax is still triggered when the dividend is paid or becomes due and payable (whichever is earlier). For dividends in specie the same rules apply as for unlisted companies.
New valuation rules for distributions of assets in specie apply. Where an asset is a financial instrument listed on a recognised stock exchange, the ruling price on the day before the dividend is deemed to be paid will apply. For any other assets the market value of the asset on the day before the dividend is deemed to be paid will apply.
Deemed dividends as a result of a debt owing to the company by a shareholder or connected person are seen as dividends in specie and the dividends tax has therefore to be paid by the company and not the beneficial owner.
Anti-avoidance provisions covering certain dividend cessions, share borrowing and share re-sales were added.
Who needs to pay Dividends Tax?
Dividends Tax is payable by the beneficial owner of the dividend. It is withheld from the dividend payment and paid to SARS by a withholding agent. The person liable for the tax, remains responsible to pay the tax should the withholding agent fail to or withhold the incorrect tax.
For more information or help with your taxes, feel free to contact PATC: https://www.patc.co.za/contact-us/