Dividends tax is a tax levied on the shareholder at a rate of 15% on dividends paid. However, where a dividend in specie is paid, dividends tax is a tax levied on the company declaring the dividend. Dividends tax is normally withheld by the company paying the dividend and is payable at the end of the month following the month in which the dividend was paid.

Dividend tax exemptions

A dividend is exempt from dividends tax if the dividend is not a dividend in specie and the beneficial owner is:

  • A SA Company;
  • The Government and various quasi government institutions;
  • Public Benefit Organisations;
  • Environmental rehabilitation trusts;
  • Pension, provident and similar funds;
  • Medical Schemes;
  • A shareholder in a registered micro-business (only the first R200 000 of dividends paid during a particular year of assessment).
  • A non-resident and the dividend is paid by a South African Listed non-resident company;

Loans to connected persons

A dividend tax will be calculated as 15% of the difference between the official rate of interest in respect of the debt and the amount of interest payable in respect of the debt. where the official rate of interest on the debt does not exceed the actual interest payable on the debt, the value of the deemed dividend is deemed to be nil. The dividend tax on a loan to a connected person is regarding is a dividend in specie and as such the liability of the company and not the shareholder.