Who is exempt from dividend tax in South Africa? (2024)

Who is exempt from dividend tax in South Africa?

Dividends are tax exempt if the beneficial owner of the dividend is an SA-resident company, SA-retirement fund or other prescribed exempt person.

What income is exempt from dividends?

Your “qualified” dividends may be taxed at 0% if your taxable income falls below $44,625 (if single or Married Filing Separately), $59,750 (if Head of Household), or $89,250 (if (Married Filing Jointly or qualifying widow/widower) (tax year 2023). Above those thresholds, the qualified dividend tax rate is 15%.

How much foreign income is tax free in South Africa?

From 1 March 2020, however, only the first R1. 25 million of foreign employment income that meets the conditions explained below will be exempt from tax. Our estate and tax planning experts remain abreast of the tax planning conditions that affect your long-term wealth.

Do I have to pay tax in South Africa if I live abroad?

South Africa has a residence-based tax system, which means residents are, subject to certain exclusions, taxed on their worldwide income, irrespective of where their income was earned. By contrast, non-residents are taxed on their income from a South African source.

Who is exempt under dividend income?

Applicability of Section 10(34):

The exemption under Section 10(34) is available to all taxpayers, including individuals, Hindu Undivided Families (HUFs), and companies. The dividend income received by the shareholder should be from a domestic company or a mutual fund registered in India.

How do you avoid tax on dividends?

You may be able to avoid all income taxes on dividends if your income is low enough to qualify for zero capital gains if you invest in a Roth retirement account or buy dividend stocks in a tax-advantaged education account.

How do I know if my dividends are tax-exempt?

In the Dividends and Distributions section of your Form 1099, you may have a value in Box 12: “Exempt-interest dividends.” This value represents dividends received from ETFs like MUB, which hold a broad range of U.S. municipal bonds that pay federal tax-exempt dividends.

Are foreign dividends taxable in South Africa?

Most foreign dividends received by individuals from foreign companies (shareholding of less than 10% in the foreign company) are taxable at a maximum effective rate of 20%. No deductions are allowed for expenditure to produce foreign dividends.

How to avoid expat tax in South Africa?

South African “expat tax” exemption

However: You must have spent more than 183 days outside South Africa in any 12-month period and. During the 183-day period, 60 days must have been spent continuously outside South Africa. You must be an employee earning a salary.

Who is exempt from paying income tax in South Africa?

Exempt income

certain pensions received from sources outside South Africa by both residents and non-residents. lump sum payments from qualifying life policies. special uniform allowances received by an employee. employment relocation allowances received by an employee.

What is the new tax law for expats in South Africa?


The amendment requires South African tax residents abroad to pay South African tax of up to 45% of their foreign employment income which exceeds the threshold of R1. 25 million.

What is the 183 day rule in South Africa?

You qualify as a South African tax resident. You perform employment services outside South Africa on behalf of an employer (it does not matter if the employer is South African or foreign) You spend at least 183 full days physically outside of the borders of South Africa in any 12-month period.

At what age do you stop paying tax in South Africa?

R83 100 if you are younger than 65 years. If you are 65 years of age to below 75 years, the tax threshold (i.e. the amount above which income tax becomes payable) is R128 650. For taxpayers aged 75 years and older, this threshold is R143 850.

Do I have to report all dividend income?

If you receive over $1,500 of taxable ordinary dividends, you must report these dividends on Schedule B (Form 1040), Interest and Ordinary Dividends. If you receive dividends in significant amounts, you may be subject to the Net Investment Income Tax (NIIT) and may have to pay estimated tax to avoid a penalty.

Can I deduct foreign tax paid on dividends?

Foreign taxes on wages, dividends, interest, and royalties generally qualify for the credit. The tax must be a levy that is not payment for a specific economic benefit and the foreign law must substantially conform to U.S. tax law, by comparing terms of foreign tax law to terms of U.S. tax law.

Are stock dividends tax-exempt?

How dividends are taxed depends on your income, filing status and whether the dividend is qualified or nonqualified. Qualified dividends are taxed at 0%, 15% or 20% depending on taxable income and filing status. Nonqualified dividends are taxed as income at rates up to 37%.

Do you pay capital gains after age 65?

This means right now, the law doesn't allow for any exemptions based on your age. Whether you're 65 or 95, seniors must pay capital gains tax where it's due.

What is the 60 day dividend rule?

The idea behind qualifying some dividends and not others is to encourage long-term investment. So one of the qualified dividend rules is that you must hold the investment for at least 60 days around the ex-div date (i.e. when the dividend is paid). So perhaps 45 days before the ex-div and 15 days after.

Do dividends count as income for Social Security?

Pension payments, annuities, and the interest or dividends from your savings and investments are not earnings for Social Security purposes. You may need to pay income tax, but you do not pay Social Security taxes.

Are dividends taxed as ordinary income?

Key Takeaways

Ordinary dividends are taxed at income tax rates, which as of the 2023 tax year, maxes out at 37%.

Are dividends taxed when declared or paid?

Investors pay taxes on the dividend the year it is announced, not the year they are paid the dividend.

What qualifies as a qualified dividend?

Qualified dividends are generally dividends from shares in domestic corporations and certain qualified foreign corporations which you have held for at least a specified minimum period of time, known as a holding period.

Is there a tax treaty between US and South Africa?

Also transmitted is the report of the Department of State concerning the Convention. This Convention, which generally follows the U.S. model tax treaty, provides maximum rates of tax to be applied to various types of income and protection from double taxation of income.

What is the tax threshold in South Africa?

Personal Income Tax

In South Africa, you are liable to pay income tax if you earn more than: R95 750 and you are younger than 65 years. If you are 65 or older but younger than 75 years old, the tax threshold (i.e. the amount above which income tax becomes payable) is R148 217.

What is dividend withholding tax in South Africa for non residents?

A dividend WHT of 20% applies to any dividend paid by a resident company to a non-resident or by a non-resident company to a non-resident where the shares in respect of which the dividends are paid are listed on a South African exchange.


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