What is Dividend Tax?
A dividend tax is a tax imposed by a jurisdiction on dividends paid by a corporation to its shareholders.
The primary tax liability is that of the shareholder, though a tax obligation may also be imposed on the corporation in the form of a withholding tax.
How Much Is Dividend Tax In south Africa?
Dividends received by individuals from South African companies are generally exempt from income tax, but dividends tax at a rate of 20% is withheld by the entities paying the dividends to the individuals.
Who is exempt from dividends tax in South Africa?
Dividends received by a South African taxpayer are generally exempt from income tax.
The major exemption though being dividends received from so-called REITs (these being some of the major property owing companies listed on the JSE (such as for example Redefine Properties Ltd).
How are dividends paid in South Africa?
In South Africa dividends come in several forms, but the most common is cash, which is deposited into shareholders’ investment accounts.
For example, if a company declares R0. 30 dividend and you own 100 shares, you’ll receive R30. 00.
How do I avoid paying tax on dividends?
One way to avoid paying capital gains taxes is to divert your dividends. Instead of taking your dividends out as income to yourself, you could direct them to pay into the money market portion of your investment account.
Then, you could use the cash in your money market account to purchase under-performing positions.