Dividend tax date set
Treasury says it expects to implement a proposed dividend tax during the second half of 2010. The dividend tax replaces secondary tax on companies (STC) and is more in line with global norms.
STC was paid by companies where as a dividend tax will be paid by the entities receiving the dividends.
The tax is set at 10% of dividends received for local individual taxpayers. Domestic retirement funds, public benefit organisations and domestic companies are exempt. Foreigners are eligible for a reduction to 5% under tax-treaty benefits.
Treasury explains that the basic legislative framework for the introduction of dividend tax was enacted in 2008. All that remains is for treaty ratification processes to be completed. All the necessary treaties have already been negotiated.
Treasury has proposed that collective investment schemes (unit trusts) operate under a "flow-through" principle. In other words, dividends received by the scheme should be distributed as dividends to unit holders.
Write to Julius Cobbett: julius@moneyweb.co.za
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Comments
Penalising individuals is definitely not good for the economy, corp governance or reducing of the admin burden. Putting a super tax on the sloppy ret funds will be much better. They are useless at addressing any issues of their members
WAKE UP . .more
by Despite the sin tax he keeps smoking on February 11 2009, 18:26
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Since the companies are effectively paying this tax at the moment it does seem odd in terms of management of tax to distribute the burden to all shareholders. However, since the companies will no longer be paying the STC the size of dividend . .more
by CTheB on February 13 2009, 10:23
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