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How to Declare Dividends on efiling in South Africa?

How to Declare Dividends on efiling in South Africa?

How to Report Dividends on eFiling in South Africa? If you own shares in a South African or overseas corporation listed on the South African exchange, you’ll receive dividends. As a shareholder, when you receive dividends, you become subject to dividend tax. This article provides guidance on how to declare your dividends through the eFiling system.

If I Receive Dividends, Must I File a Tax Return?

Yes, if you receive dividends, you are generally required to file a tax return. Dividends are considered taxable income, and it’s important to report them to the tax authorities. Whether you receive dividends in cash or other forms, such as stock or property, they contribute to your overall income and are subject to taxation.

When you earn dividends, you should receive a Form 1099-DIV from the financial institution detailing the amount of dividends you received during a specific tax year, along with any taxes that were withheld. This form helps you accurately report your dividend income when filing your tax return.

It’s essential to file a tax return to ensure compliance with tax regulations and to determine the appropriate amount of tax owed on your total income, including dividends. Filing your tax return allows you to report your income accurately, claim any eligible deductions or credits, and fulfill your tax obligations.

Using eFiling tools or other tax preparation software can streamline the process of reporting dividends and other income, ensuring that you meet the deadlines and requirements set by the tax authorities. If you have any questions about whether you need to file a tax return due to receiving dividends, you can contact the relevant tax authorities or seek advice from a tax professional.

How to Declare Dividends on eFiling:

1. Withholding Agent: The withholding agent, responsible for deducting tax from dividends, pays the tax to SARS. To qualify for lower rates or exemptions, you need declaration and undertaking documents from the withholding agent. Complete the form and send it to the agent for exemption.
2. eFiling Registration: During eFiling registration, choose Dividends Tax when prompted to register for taxes. The Dividends Tax Process involves two forms: DTR01 for declaring dividends and DTR02 for verifying dividends.
3. Filing a Tax Return: If you receive dividends, filing a tax return is mandatory. Dividends are cash distributions of a company’s earnings to shareholders. You’ll receive a Form 1099-DIV from financial institutions detailing dividends and taxes withheld. Use the eFiling tool to enter and manage dividend information for your 2023 Tax Return.
4. Tax on Dividends: Dividends fall into two categories – ordinary and qualified. Ordinary dividends from a company’s earnings are subject to ordinary income tax rates (10% to 37%). Qualified dividends, subject to capital gains tax, have tax rates of 0%, 15%, or 20%. File an amended tax return for unreported expenses from a prior year, ensuring compliance with SARS eligibility conditions.

Where to Declare Dividends:

Dividends Tax is withheld by the agent and paid to SARS. If the agent fails to deduct it, the dividend owner remains liable. Exemptions apply when dividends involve cash distributions of assets, with the corporation paying the tax. Dividend tax should be paid to SARS by the withholding agent before the month-end following dividend payment. Interest and penalties apply for late filing. To be eligible for exemptions or lower rates, the dividend owner must receive undertaking and declaration documents from the withholding agent.

How to File Dividend Withholding Tax (DWT) Online:

1. Register your business on eFiling.
2. Select the company type, then click “returns” and “Dividends Tax.”
3. Choose the tax period and click “Submit New Return.”
4. If DWT has already been submitted, click “Submitted Return” to make adjustments.
5. Select “DWT Returns” under “Request for Correction.”

Provide required information, including account number, dividend per share, number of shares, tax withheld, dividend value, and net amount tax data. For further information, visit www.sars.gov.za or contact the SARS Contact Center at 080000 (SARS) (7277) during weekdays or visit your local SARS branch.

Ensure timely filing to claim refunds, comply with tax regulations, and manage dividend income efficiently.