FAQ: Should the company submit a STC return (IT56) reflecting the company’s available STC credits for the last dividend cycle under STC? If it does not will it lose the STC credits under the Dividends Tax system?
You only have to submit a STC return when it accompanies a STC payment (i.e. when STC is due). This requirement remains the same for the “final dividend cycle” under STC. Where an actual dividend has been declared and the dividend cycle ends on 31 March 2012, a return need only be submitted if STC […]
FAQ: What happens if the company does not notify the beneficial owner of the STC credit portion of the dividend?
If the company does not notify the beneficial owner of the STC credit part of the dividend – the Dividends Tax liability of the beneficial owner may not be reduced by the STC credit portion, and the beneficial owner (if it is a company) will not be able to use the incoming STC credit when […]
FAQ: In what format should the notification to the beneficial owner be in respect of the portion of the dividend constituting a STC credit?
There is no format prescribed for this notification. However, it should be clear from the notification what the STC credit portion of the dividend is.
FAQ: Why is STC being replaced?
The main objectives behind the change to Dividends Tax are: To align the level of the taxation of dividends in South Africa with the international norm where the recipient of the dividend, not the company paying it, is liable for the tax (South Africa was one of a few countries with a corporate level tax […]
FAQ: How should the STC credit be applied?
The company paying the dividend must notify the beneficial owner of any part of the dividend that carries a STC credit, and must be applied pro rata to the full dividend. If there is sufficient STC credit to cover the full dividend amount no Dividends Tax becomes payable by the beneficial owner. The remaining STC […]
FAQ: How is the STC credit calculated?
The STC credit is comprised of two possible sources: Any unused STC credits of the company brought forward from the final dividend cycle under the STC system, and Any new pro rata portion of any STC credit attaching to dividends accruing to the company under the Dividends Tax system.
FAQ: What is the main difference between Dividends Tax and STC?
The main difference lies in who is liable for the tax. Dividends Tax is a tax levied on shareholders (beneficial owners of dividends) on receipt of dividends, whereas STC is a tax levied on companies on the declaration of dividends. There is an exception to this basic Dividends Tax rule in the case of a […]
FAQ: When will Dividends Tax come into effect
Dividends Tax applies to any dividend declared and paid on or after 1 April 2012.
FAQ: What is the rate of Dividends Tax?
Dividends tax was introduced at a rate of 15% when it came into effect on 1 April 2012. The rate was increased to 20% in respect of any dividend paid on or after 22 February 2017 (irrespective of when it was declared).
FAQ: What is a dividend?
A dividend is defined in section 1 of the Act, but in essence is any payment by a company for the benefit of a shareholder in respect of a share in that company (excluding the return of contributed tax capital, i.e. consideration received by a company for the issue of shares).
