Local Dividends & Dividends Tax

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fire2029

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I am trying to understand (local) Dividends Tax. This might be a dof question.

I thought the following applies:
If I have invested in my personal capacity in a South African registered company on the JSE (e.g. Pickn Pay) - that there will be no Dividends tax applicable. This is Irrespective of whether I have invested via a Tax free savings vehicle or not.

Yet I am now doubting the above, considering the following
1. Dividends Tax is a 20 % withholding tax - (it is the obligation of the company paying the dividend to withhold 20% and pay it over to SARS)
2. Although the obligation to withhold dividends tax falls on the company declaring the dividend, the company paying the dividend is exempted from withholding the tax in three circumstances:
​
a. If the person to whom the dividend payment is made has furnished the distributing company with a declaration from the beneficial owner that the dividend is exempt from the dividends tax or is subject to a lower rate in terms of applicable double tax treaty. The declaration must be made by a date determine by the company or, if the company did not determine a date, by the date of payment of the dividend. The declaration must be accompanied by a written undertaking to inform the company in writing should the person cease to be the beneficial owner. Both the declaration and the written undertaking must be in the prescribed form (section 64G(2)(a)).​

b. If the beneficial owner forms part of the same group of companies as the company paying the dividend (section 64(G)(2)(b)).​

c. If the payment is made to a regulated intermediary.​

Questions.
Lets take my investment in Pickn Pay. If Pickn Pay are paying cash dividends
- Firstly, are they liable to withhold dividends tax and pay it over to SARS?
- Secondly, if they are withholding tax. I have never filled out any form that I am exempt from paying dividends tax? Am I actually paying Dividends Tax.

Additional Question:
- If I invest in a Fund - e.g. Allan Gray Equity Fund - does the fund apply for relevant exemption on behalf of all unit holders?
- What about ETFs? e.g. Satrix Top40 ETF?

These questions might be a bit dof. I apologise, but am looking forward to this forum's answers.

Thanks
 
Last edited:
Answers to your questions, my view (or how I do / see things)

1) The provider is responsible paying SARS (as you will see it is minused when you receive dividends)
2) When the tax season starts, and you got all your supporting docs, add all the different things up like
2.1) Dividend Tax
2.2) Reit's
2.3) Interest received
and completed it in the investment section on the SARS page

3) The only exception is related to RA's / preserved funds etc (where you wont get taxed now but later)

4) Related to ETF's, the same thing, 20% taxed, no questions asked (If it isnted related to the 3rd question)
 
fire2029 said:
So as a South African resident, am I exempt from paying local dividends tax?
Click to expand...

Why would you be exempt from paying dividend tax when dividends are paid to you? The only way your are exempt from paying it to my knowledge is via a Tax Free vehicle like a TFSA.
 
fire2029 said:
So as a South African resident, am I exempt from paying local dividends tax?
Click to expand...
You are not exempted from tax on dividends as a local. Only if your dividends are paid into a Tax-free savings account (TFSA) will it be exempted. Note: if international dividends are paid into a TFSA, you may still be required to pay tax in the country the dividends were issued.
 
McT said:
You are not exempted from tax on dividends as a local. Only if your dividends are paid into a Tax-free savings account (TFSA) will it be exempted. Note: if international dividends are paid into a TFSA, you may still be required to pay tax in the country the dividends were issued.
Click to expand...
Thanks. That is clear to me now.

1. How is this principle applied when it comes to investing in an ETF (eg Satrix Top40 ) via a TFSA.
Given I do not need to pay dividend tax within TFSA, is tax (1) withheld by ETF provider & (2) paid back to me?

2. How do I get the withholding tax back if I invest directly in a local JSE listed company within my TFSA?
 
fire2029 said:
Thanks. That is clear to me now.

1. How is this principle applied when it comes to investing in an ETF (eg Satrix Top40 ) via a TFSA.
Given I do not need to pay dividend tax within TFSA, is tax (1) withheld by ETF provider & (2) paid back to me?
You are not taxed (or actually, taxed at 0% related to a TFSA)

2. How do I get the withholding tax back if I invest directly in a local JSE listed company within my TFSA?
Again, you are not taxed
Click to expand...
 
fire2029 said:
Thanks. That is clear to me now.

1. How is this principle applied when it comes to investing in an ETF (eg Satrix Top40 ) via a TFSA.
...
Click to expand...


Dividends hasnt changed in your world.
The big legal changes that came in had to do with who pays the money over to SARS.
Previously the company paid it over to SARS, now the responsibility has shifted to your broker.
If you dont have a broker, then you have the obligation to pay it when you do your tax return.

With a TFSA, it is a special vehicle that allows that investment to be completely tax free.
Only that investment, all other investments (public or private) dont fall under these rules
The TFSA is capped to something like R36k a year and a total cap of R500k.

An individual is still liable for div tax on all other dividends declared.

As the TFSA is marked a special vehicle, whoever administers your account/the broker
will do all the dealings of paying and not paying and send you a report at the end of the year.
 
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