We can only hope that companies will pay out more on dividends now that they are not taxed but to answer your question dividends will be taxed on investors hand but will be withheld by the company paying such divs.
Well, all I can say is that he shouldn't have said in his introduction that he wanted to encourage personal savings by 2014 when he knew he was going to slam us for the next two years. And the price of ciggies! And wine!
As a dividend investor, this is how I see it. Under STC I got R100 and the co. paid R10 STC. Cost to co. = R110. If the co. wants to keep it's cost to co. at R110 then it pays R11 div. tax (at initial proposal of 10%) and I get R99. Now at 15% div. tax, co. pays (on my behalf)tax of R16,50 and I get R93,50. So effectively, taxes have gone from 10% (10/R100) to 11% (11/R99) to now 17.65% (16.5/R93,50). It appears that the minister has his own "invisible hand".
From 1 April 2012 co.'s will stop paying STC. What effect will this have on their HEPS as there is no longer a STC expense to deduct. How would this effect PE ratios(or earnings yields)and dividend yields? I would think that HEPS gets a "once off" kicker and therefore PE's come down. The div. yield should also get a kicker and increase. As GVV says, the co. must now pay a R118 div. to match the "clean" R100 they paid to the investor who has to pay the 15% div. tax to protect the share price. That's a 18% div. "increase" on its own. Thoughts? Are my deductions correct?
Surely there is a huge advantage to entities that are exempt from dividend withholding tax (such as pension funds) since before the company was paying STC (10%) and now nothing. (The dividend withholding tax paid over to SARS will be claimed back by the exempt pension fund). So people who invest primarily in pension funds gain 10% while individuals investing directly loose 5%? Am I right?
This is redistribution of wealth on a grand scale. I can see my standard of living in retirement 27 years from now already dwindling. I hate living in this country. They want everyone to save, but taking the power from the individual on the streets hands and forcing us to invest in more pension funds (as opposed to self-investment in dividend driven shares), thus paying exuberant performance fees to every man and his dog in investment companies. Nice going you f$%^&rs.