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Thread: Pty Dividends

  1. #1
    Join Date
    Nov 2010
    Thanked 61 Times in 54 Posts

    Pty Dividends

    What are the implications drawing dividends from a Pty Ltd? What are the tax implications for a shareholder?

  2. #2
    Silver Member
    Join Date
    Jan 2012
    Thanked 53 Times in 40 Posts
    A new South African (SA) dividends tax was introduced on 1 April 2012. Dividends tax replaces secondary tax on companies (STC), so most investors will recieve the same net dividends. While STC was paid by the company declaring the dividend, dividends tax will be withheld by either the company declaring the dividend or a regulated intermediary.

    Exemption from dividends tax?
    SA residents
    The Income Tax Act (the Act) sets out a list of beneficial owners who qualify for an exemption depending on the nature or status of the beneficial owner which includes:
    • a company which is resident in South Africa (this includes close corporations);
    • the government, provincial government and municipalities (of the Republic of South Africa);
    • a public benefit organisation (approved by SARS in terms of section 30(3) of the Act), e.g. a charity or NGO;
    • a mining rehabilitation trust contemplated in section 37A of the Act;
    • an institution, body, or board contemplated in section 10(1)(cA) of the Act (generally applies to specially approved entities which
    conduct scientific, technical or industrial research);
    • a fund contemplated in section 10(1)(d)(i) or (ii) of the Act (pension fund, pension preservation fund, provident fund, provident
    preservation fund, retirement annuity fund, beneficiary fund or benefit fund);
    • an entity contemplated in section 10(1)(t) of the Act (i.e. quasi-government organisations such as CSIR, SANRA, the Development
    Bank of Southern Africa, traditional councils, regional electricity providers and water service providers).
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