Dividends Tax exemption and reduced rate declaration form

 

Before downloading the form and completing it, we encourage you to familiarise yourself with some important information below.

For assistance, please contact the relevant telephone numbers:

  • For Sanlam, call 0861 100 913 (or +27 11 373 0000 for calls from outside South Africa)
  • For all other companies, call 0861 100 930 (or +27 11 870 8219 for calls from outside South Africa)

In brief:

  • Tax legislation imposes an obligation on Computershare to collect and report certain dividend information regarding shareholders to the South African Revenue Service ("SARS");
  • Action you MUST take is set out in 'What you need to do" below and requires you to provide information to Computershare;
  • Certain Beneficial Owners will be exempt from the payment of Dividends Tax while a reduced   rate of taxation will apply to others.
  • Beneficial Owners who are natural persons and who are South African residents for tax purposes, or Beneficial Owners who are otherwise not eligible for exemption from Dividends Tax will be subject to the full 20% Dividends Tax charge.
  • The Namibian Dividends Tax rate is currently 15% which means that if you hold your shares on the Namibian share register, you are entitled to claim a reduced rate of Dividends Tax;
  • To claim an exemption or reduced rate of Dividends Tax you need to complete and submit a Dividends Tax Declaration form (Annexure A). This exemption or reduced rate will apply to all future dividends declared by the company, however, the Declaration Form is only valid for a five-year period.
  • Failure to respond to this request for an updated Dividends Tax declaration form may result in future dividends being subject to the full 20% Dividends Tax. 
  • For the avoidance of any doubt, shareholders should seek advice from their own tax advisers or relevant tax authorities.

Background

With the introduction of Dividends Tax legislation in April 2012, dividends are taxed in the hands of shareholders. With effect from 1 April 2012 and where applicable, we have withheld the required Dividends Tax from your dividends and paid it to SARS on your behalf. Please note that the Dividends Tax rate increased from 15% to 20%, effective 22 February 2017.  Computershare is legally obligated to record the tax numbers of shareholders. The recent amendments to the Tax legislation that became effective on 1 July 2020 allows certain shareholders to qualify for an exemption or reduced rate of Dividends Tax. Where shareholders submit a declaration form to Computershare in this regard, this declaration will only be valid for a five-year period.

Who is exempt from Dividends Tax?

The liability for the Dividends Tax falls on the "Beneficial Owner" which is defined as "the person entitled to the benefit of the dividend attaching to the share".

Beneficial Owners who are natural persons and who are South African residents for tax purposes, or Beneficial Owners who are otherwise not eligible for exemption from Dividends Tax will be subject to the full 20% Dividends Tax charge.

Certain Beneficial Owners will be exempt from the payment of Dividends Tax while a reduced rate of taxation will apply to others. As a Beneficial Owner of a dividend, it is your responsibility to advise us if you are exempt or eligible for a reduced rate so that the tax deduction is made correctly. We are not required to validate any exemption you declare and, should a dispute arise as a result of an erroneous declaration on your part, you will be responsible for resolving the matter with SARS.

If you are exempt from Dividends Tax but you do not advise us by completing the required section (section B) on the declaration form, we will be obliged to withhold 20% of the dividend amount and remit it to SARS on your behalf.     

Exemptions

  • South African tax resident companies (including close corporations)
  • The Government, provincial government or a municipality (of South Africa)
  • Public benefit organisations (approved in terms of s30(3) of the Income Tax Act)
  • A Trust contemplated in section 37A of the Income Tax Act (e.g. mining rehabilitation trusts)
  • An institution body or board contemplated in section 10(1)(cA) of the Income Tax Act (which includes amongst others scientific, technical and research industries)
  • A fund contemplated in section 10(1)(d)(i) or (ii) of the Income Tax Act (e.g. pension, provident or retirement annuity funds, beneficiary fund or benefit fund [i.e. friendly society or medical scheme])
  • A person contemplated in section 10(1)(t) of the Income Tax Act (e.g. CSIR and SANRAL, regional electricity distributors, water services providers etc.)
  • A shareholder in a registered micro business as defined in the Sixth Schedule to the Income Tax Act to the extent that the aggregate amount of the dividends paid by the registered micro business to its shareholders during the year of assessment in which the dividend is paid does not exceed R200 000
  • A person who is not a resident and the dividend is a dividend contemplated in paragraph (b) of the definition of "dividend" in section 64D (i.e. a dividend paid by a foreign company whose share listing is on the JSE, such as dual-listed shares)
  • A portfolio of a collective investment scheme in securities
  • Any person insofar as the dividend constitutes income of that person (i.e. falls into normal tax system) (e.g. REIT Dividends received by South African tax residents)
  • any person to the extent that the dividend was subject to STC
  • Fidelity or indemnity fund contemplated in section 10(1)(d)(iii)
  • Double Taxation Agreement or
  • Other international agreement

REIT Dividends - South African tax resident shareholders

REIT Dividends received by  South African tax residents must be included in their gross income and will not be exempt from income tax (in terms of the exclusion to the general dividend exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act) because they are dividends distributed by a REIT. These distributions are, however, exempt from dividend withholding tax in the hands of South African tax resident shareholders, provided that they complete Parts A and B of the declaration form (Please select exemption (l) – "any person insofar as the dividend constitutes income of that person (i.e. falls into normal tax system)" and return it to, Computershare.

When does a Reduced Rate apply?

Reduced withholding rates are applicable to certain foreign resident beneficial owners. Where a South African resident company listed on an exchange pays a dividend to a foreign resident investor, the shareholder could be entitled to a reduced rate of Dividends Tax based on the provisions of the relevant Double Taxation Agreement (DTA) between South Africa and the country of tax residence of the foreign investor, for example, the DTA between South Africa and Namibia provides for a tax rate of 15%.  

What you need to do

To claim an exemption or reduced rate, you must complete and submit a Declaration Form (link provided at the beginning of this page) to us, as follows:

1. PART A – Beneficial Owner Details

To ensure that the Dividends Tax withheld is correctly allocated, you will need to provide us with your SARS income tax reference number and confirm the validity of the details (e.g. address, identity or registration number and contact details) we hold on our records. We enclose a declaration of status form for this purpose.

2. PART B – Exemptions

You also need to determine whether you are exempt from Dividends Tax in terms of the Act (refer details of exemptions above). Should you qualify for an exemption from  Dividends Tax, please advise us by completing Part B of the Declaration Form (i.e. Exemption - Declaration and Undertaking to be made by the beneficial owner of a dividend). Where you are a juristic entity, the declaration will need to be accompanied by a certified copy of the resolution giving the signatory the relevant authority to sign the declaration (if not previously provided).

3. PART C – Reduced Rate

If you are liable for Dividends Tax you also need to determine whether you qualify for a reduced rate in terms of an applicable Double Taxation Agreement.  Should you not be required to pay the full rate of 20%, please advise us by completing Part C of the Declaration Form (i.e. Reduced Rate - Declaration and Undertaking to be made by the beneficial owner of the dividend).

Namibian shareholders qualify for a reduced rate in terms of the current DTA between South Africa and Namibia.

Where you are a juristic entity, the declaration will need to be accompanied by a certified copy of the resolution giving the signatory the relevant authority to sign the declaration (if not previously provided).

To submit an updated Dividends Tax declaration form, visit the following link:

DOWNLOAD THE LATEST DIVIDEND DECLARATION FORM.

 

Alternatively please email forms and any supporting documentation to DividendTax@Computershare.co.za or post it to our address detailed below so that we can update our records:

Computershare
Private Bag X9000; Saxonwold
2132 South Africa

For more information regarding Dividends Tax, or to request a printed declaration form, please contact our Call Centre:

  • For Sanlam, call 0861 100 913 (or +27 11 373 0000 for calls from outside South Africa)
  • For all other companies, call 0861 100 930 (or +27 11 870 8219 for calls from outside South Africa)

Failure to respond to this request for an updated Dividends Tax declaration form (where applicable) will result in future dividends being subject to the full 20% Dividends Tax rate. 

As Computershare cannot give you legal or tax advice, you are encouraged to contact your legal or tax adviser if you have specific questions about the impact of the above on your personal situation.

4. Important note

It is very important that to include details of all share account numbers registered in your name.  The information will only be applied to the company/ies linked to the share account in which you hold shares, as stated on the Declaration Form and not to any others.

The Declaration Form must be completed by the Beneficial Owner or the authorised signatory of a juristic person who is a beneficial owner.

Please ensure that you sign both the Declaration and the Undertaking on the Declaration Form.

5. Obligation to notify of change in beneficial ownership

Lastly we advise that, in terms of the legislation,  an obligation is placed on you to notify us in writing of any change in beneficial ownership (for example when shares are transferred or sold to another person) or if there is a change in your tax status. A new Declaration Form must be completed. Declaration forms are available on our website or may be obtained from us by contacting our Call Centre at the telephone number that appears in point 3 above.