Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
Search Products
Filter by Categories
B-BBEE
Blog
Company Secretarial
Featured
General Business
General Interest
Investing in Property
Marketing
Personal Growth
Personal Wealth
Tax
Trusts and Estate Planning
Uncategorized

Dividends withholding tax is now 20%, but when is it charged or not charged?

In principle, DWT is withheld by the company paying the dividend, then paid over to SARS by the end of the month following that in which the dividend was declared or paid. So if the dividend was R100 000, the shareholder gets R80 000 and SARS gets R20 000.

If the shareholder is not a South Afrcian resident (and provided his/her share certificate was stamped “Non-resident”), then we have to go to the Double Taxation Agreement between the shareholder’s country of residence and South Africa. Depending upon whether or not the dividend will be taxed in the shareholder’s country of residence, our withholding tax will be somewhere between 5% (if taxed) and the full 20% (if not taxed).

If the shareholder is an SA resident company, then no DWT is deducted, it only kicks in when the dividend leaves the corporate structure.

Then there are deemed dividends. The one most likely to affect you deems as a dividend the difference in the interest charged by your company on a loan to you (i.e. a debit loan account) and the interest at the official rate (1% over the repo rate which is currently 6,5%). The DWT on an interest free loan of R100 000 is therefore 20% x 7.5% x R100 000, which is only  R1 500. The catch is that each year, there’s a similar deemed dividend and more DWT to pay.

0 comments

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Looking for even more informative content? Check out the books I have written which have proved to be very popular.

Need help with your Trust or Business?

Contact us today or set up a free meeting with our CEO, Derek Springett. We have been offering expert advice and business services since 1971. You can also view see our full list of services.

Do you want to leave your cart?

Your cart is awaiting your next purchase, so please proceed to the Home page and continue shopping. If you are leaving your cart because of problems, why not give us a call on our 24 hr numbers 063 866 8928 or 011 805 0030 (subject to load shedding)? If all else fails, call Derek, our CEO on 082 552 9696. We’ll do what we can to help