Please can somebody clarify whether local dividends received on listed companies are taxable in the individuals hands. My tax consulatnt and I are disagreeing on this issue where he says yes and I say no. Dividends if I understand matters correctly are taxable (STC) but paid by the company issuing the dividend. Please help as I now have a tax problem as my tax consultant has placed local dividends under interest received when submitting my return.THANK YOU.
From 1 April 2012, STC will fall away, and you will be charged a withholding tax of 10% instead of the company. In theory, the net effect should be the same - instead of STC, you get taxed. In practise, you will be at the mercy of all companies changing their dividends policies. As for your tax consultant, it depends on what you are earning dividends on. Dividends from companies - your consultant is wrong, period. They are currently tax free. Dividends from listed property funds - well these are actually income distributions, and are taxable, in which case your consultant is treating them right.
Property Loan Stocks 'dividends' are taxable in terms of income - but what you need to check is if the payment or distribution is listed as a dividend or a payment of some other sort. If a dividend then at this stage not taxable in your hands.