123 Consulting

Maximising your dividend income

You could improve your return by selling the share instead of waiting for the dividend payout—but there are caveats. I was recently asked an interesting question about dividends.  The person concerned was curious as to whether—from a tax and return perspective—it is better to take the dividend itself, or sell the share and take the […]

ARE YOUR TAX PRACTICES PAYING DIVIDENDS?

  Although there are several exclusions to the general rule, South Africa applies a withholding tax on dividends declared by companies at a rate of 20%. It is essential to appreciate that such a withholding obligation for companies do not arise only on “ordinary” dividends but that the concept of what constitutes a dividend, goes much wider. The Income […]

TAX CONSEQUENCES OF USUFRUCTS CREATED UPON DEATH

A usufruct is a limited real right in property. The usufruct construct takes the form of a common-law personal servitude, which, as a limited real right, grants the holder (the usufructuary) the right to use someone else’s property, including the fruits. Typical examples include where someone is granted the right to use a house, or […]

CLEARING LOAN ACCOUNTS THROUGH DIVIDENDS

In terms of the Tax Administration Act, the South African Revenue Service (“SARS”) can issue, in response to an application, Binding Private Rulings (“BPR”) and clarifies how the Commissioner would interpret and apply the provisions of the tax laws relating to a specific proposed transaction. BPR 346 determines the income tax and dividends tax consequences of the redemption of intra-group loans […]

HOW SOUTH AFRICAN DIVIDENDS ARE TAXED

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).  Dividends received from REITs are not exempt from income tax, and will […]

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