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Don't forget the legal tax provisions for dividends received or accrued after 1 January 2013!

by , 18 January 2013
The latest ENS tax news update offers a reminder that provisions of the Income Tax Act came into operation on 1 January 2013. Here's all you need to know about how the sections apply to your dividends or foreign dividends received or accrued after 1 January 2013, as well as what the anti-avoidance section means for you.

In terms of the current provisions of the 2012 Taxation Laws Amendment Bill, the provisions of sections 8E and 8EA of the Income Tax Act, 1962, came into operation on 1 January 2013. If the requirements of these sections are met, the sections will apply to dividends and foreign dividends received by or accrued to any person during any year of assessment commencing on or after 1 January 2013.

Here are 3 date conditions of dividends included in the anti-avoidance section of the Taxation Laws Amendment Bill, which will affect if sections 8E and 8EA continue to apply the dividends:

  1. if a dividend is received in cash by any person during any year of assessment of that person that commences on or after 1 January 2013, and
  2. that dividend accrued to that person on or after 1 April 2012,  and
  3. that dividend is received by that person on or after a date three months after the date on which that dividend or foreign dividend accrued to that person, the provisions of sections 8E and 8EA will continue to apply to such dividends.

Here's when you'll have to take note of these consequences:

  1. If you've not yet addressed section 8E or 8EA concerns,
  2. If you've declared dividends after 1 April 2012,
  3. If the dividend remains outstanding on loan account on 1 January 2013, and
  4. If your year of assessment commenced on 1 January 2013. 

If your year of assessment commences after 1 January 2013, the outstanding dividends that fall within the above requirements should be paid in cash before the year of assessment commences.

We included a full dividends chapter in the Practical Tax Loose Leaf Service. In it, you'll discover:
  • What's the difference between dividends tax (DT) and Secondary Tax on Companies (STC)?
  • What is a dividend and how's it paid?
  • How do you pay a dividend?
  • Your company must withhold and pay the DT to SARS on behalf of the shareholder
  • Your company's liable for the DT – not the shareholder if you pay out one of these two types of dividends
  • When do you become liable to pay the DT?
  • Who's exempt from DT?
  • SARS doesn't allow these 3 dividend transactions to be exempt from DT
  • How to deal with DT for non-resident companies and shareholders
  • How to avoid a SARS audit of your dividends
  • How to complete the DTR02 form in 6 steps
  • Your STC credits are still valid for 5 years – use them to save money!
Get your copy of the Practical Tax Loose Leaf  today!

Source:
  • ENS tax news update email 10 Jan 2013

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