Foreign dividends are taxed at 20%. Credit is given for the foreign amount paid (15%), therefore 5% left to pay to SARS.
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Offshore investing & dividends tax
- Thread starter JayM
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Foreign dividends are taxed at 20%. Credit is given for the foreign amount paid (15%), therefore 5% left to pay to SARS.
They apply the 25/45 rule and add that amount to your normal income, which i assume makes the equivalent 5%... Or at least that was my experience when i declared my foreign dividends. Also on IB with the 15% DWT. Didnt feel like 5% to me
I've never heard of a 45/25 rule. Do you have a source?
Here you go:
Foreign Income Tax for SA Residents | TaxTim SA
Do your Tax Returns Quickly and Easily with TaxTim Today! TaxTim is your Friendly Online Tax Assistant - Do your Tax Return Right for Maximum Refund.
www.taxtim.com
Scroll down to foreign dividends.
My example was as follows:
Dividends: R60k
Tax: 9k (15%)
25/45 Rule (of the R60k): R33k
Taxable Income: R27k (difference between 60k and 33k), which in my return was actually loaded as taxable income against my tax rate <> 5%...
Here you go:
Foreign Income Tax for SA Residents | TaxTim SA
Do your Tax Returns Quickly and Easily with TaxTim Today! TaxTim is your Friendly Online Tax Assistant - Do your Tax Return Right for Maximum Refund.
Scroll down to foreign dividends.
My example was as follows:
Dividends: R60k
Tax: 9k (15%)
25/45 Rule (of the R60k): R33k
Taxable Income: R27k (difference between 60k and 33k), which in my return was actually loaded as taxable income against my tax rate <> 5%...
Thanks, wasn't aware of that. Fortunately the tax works out to the same as a flat 20% DWT if you're on the max marginal rate (45%).
Howsit. Yes, I like understanding the nitty gritty of the calculation so I can do it myself beforehand. Quick question, do you know at what point you need to register for provisional tax?
RedViking
Nord of the South
If I have shares in a business registered and bank account in Estonia and the business starts paying out dividends, I will just pay 20% tax and not 39% or whatever I would usually need to pay?
Also what about a busines in New Zealand?
Also what about a busines in New Zealand?
SARS kindly registered me for provisional tax (and didn't even notify me, then charged me penalties for failing to submit a provisional return!). They did this as soon as I was earning more than the exempt interest amount. If you make any money outside of a regular PAYE job, you should register for provisional tax.
My tax is so complicated now that I pay my business accountants to file returns and attend to all SARS queries. Money well spent.
As per the link @Lukcydog posted, if your marginal tax rate is 45%, then you'll pay 20%. If it's less, you will pay less. There may be specifics in the DTAs with those countries which could change things completely though.
You also need to investigate the dual tax treaty between the countries. If its like Germany (26%) or Switzerland (38%) then you will have a "ball of a time" trying to recover the 6% for example (not worth it)
Could you not claim the 9k as foreign tax credit?Here you go:
Foreign Income Tax for SA Residents | TaxTim SA
Do your Tax Returns Quickly and Easily with TaxTim Today! TaxTim is your Friendly Online Tax Assistant - Do your Tax Return Right for Maximum Refund.
Scroll down to foreign dividends.
My example was as follows:
Dividends: R60k
Tax: 9k (15%)
25/45 Rule (of the R60k): R33k
Taxable Income: R27k (difference between 60k and 33k), which in my return was actually loaded as taxable income against my tax rate <> 5%...
From the TaxTim article:
"You need to declare foreign dividends (source code 4216) in the Investment Income section of your tax return, together with the foreign tax credit (source code 4112)."
So calculation would be:
Taxable Income: 20/45* R60k = R26.67k
Assuming 45% marginal rate, tax liability = 45%* R26.67k = R12k (20% of the R60k gross dividend)
Less foreign tax credit: R12k - R9k = R3k
Amount to pay SARS: R3k (5% of R60k gross dividend)
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There is a selection for "foreign dividends received" and you enter in the total dividends as well as the tax (4112) paid offshore and they then calculate the 5% difference (DTA between USA and ZA = 15%).
Thread necro, but if you go the VWRD route do you pay more tax than VT? VWRD already taxed at 10% in Ireland but not included in statement meaning you need to declare the net amount for SARS and then pay 20% tax on that?
VT shows gross and does DWT payments so that's easier to declare, but obviously has estate issues.
VT shows gross and does DWT payments so that's easier to declare, but obviously has estate issues.