are big news in Canada at the moment.
A growing batch of Alberta energy companies have replaced their traditional dividend-reinvestment plans with 'stock dividend' programmes.
This means the shareholders who receive dividends
only pay tax
if and when they sell the shares. And when they do, they pay tax
at capital gains rates, not as if it were ordinary income, says Canada's Globe and Mail.
There's been similar interest in dividends tax
locally ahead of Finance Minister Pravin Gordhan's budget speech in two weeks' time.
That's because the deadline for submitting your dividends tax
documents to SARS
is the following day, 1 March.
But changes in dividends tax
are unlikely for usbecause secondary tax on companies (STC)
, which was phased out and replaced by dividends tax
, has been stable this year.
'The contribution of dividend withholding tax
, which replaced STC of 10% last year, has still to be seen. However, the dividends tax rate
at 15% is substantially higher,' said Des Kruger, a director for tax
at Ernst & Young on the Business Report
If you're liable to pay dividends tax
, you'll have to submit the relevant supporting data and request and file the associated dividends tax return
Here's what you'll have to submit to SARS by 1 March to meet the dividends tax deadline
If you've received or paid out a dividend, the dividends tax deadline
You'll have to submit information on dividends received
, who received the dividend
and who paid it over to SARS
And it's up to you to submit the relevant supporting data and request and file the associated dividends tax return
, reminds SARS
So if your business has paid or received a dividend this tax year
, get all your documents in order now. You only have two weeks to submit them.
If you use Internet banking to pay SARS
, you'll notice that the previous 'STC beneficiary' has been removed and replaced with a beneficiary for Dividends Withholding Tax (WHT)
, says SARS.
This new beneficiary lets you pay both STC and dividends tax
, as you may still have to account for STC from any dividends
you received before dividends tax
was introduced on April 2012, writes the Tax Bulletin
If you need more information on dividends tax
, get your hands on the Practical Tax Loose Leaf
. In the Practical Tax Loose Leaf
we've got a dedicated chapter on dividends tax
, 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 the Practical Tax Loose Leaf here...