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Dividends Tax

by Anina Venter | Feb 07, 2014
The payment and receipt of dividends have various tax implications for financial institutions. These include the implications for income tax, capital gains tax (CGT), secondary tax on companies (STC) and with effect from April 2012, also dividends tax. The income tax implications inter alia include specialised rules for local dividends and foreign dividends. Long-term insurance companies must furthermore take note of the implications of dividends on their expense ratio.
 
Many taxpayers use the dividends recorded for accounting purposes in the calculations of the above-mentioned taxes and do not recognise the differences in the definition of dividends that exist between these taxes. This could lead to inaccurate submissions to SARS.