How to start trading

Overview

Dividends Tax (DT) became effective on 1 April 2012 and replaced Secondary Tax on Companies (STC). STC was a tax levied on the company declaring the dividend, while DT is a tax levied on the investor/beneficial owner of the dividends.

 

As a result of this change, the legal liability for tax on dividends will shift from the company paying the dividend to that of the investor. In terms of the DT requirements, a regulated intermediary needs to withhold the DT at a rate of 15%, if no exemption applies and pay same over to SARS.

 

Since 1 April 2012, we have been deducting the 15% DT to pay over to SARS, unless the client qualifies for an exemption and Absa Stockbrokers and Portfolio Management is in possession of their declaration.

 

What is DT?

DT is a tax on shareholders (beneficial owners of dividends) when they receive dividend distributions from companies.

 

What triggers DT?

Dividends Tax is triggered by the payment of dividends by any:

 

  •  South African tax resident company; or

  •  Foreign company in respect of shares listed on the JSE. The payment date is deemed to be the earlier of the actual

      payment date or the date the dividend "becomes payable". Where a dividend is declared payable to shareholders

      registered in the company's share register on a certain date (record date), it becomes payable on that date.

 

Exemptions

Not exempt: Taxable persons and entities :

 

  •  Natural persons (individuals).

  •  Foreign investors. Foreign investors will be subject to DT at a rate of 15% but may be eligible for a tax reduction in

      DT if you are a non-resident or if there is a double taxation agreement with your country of residence.

 

Exempt: The following investors qualify for exemption:

 

  •  A SA resident company (including close corporations)

  •  Public benefit organisations approved by the Commissioner

  •  A trust contemplated in Section 37A of the Income Tax Act, i.e. a mining rehabilitation trust

  •  A registered pension fund, pension preservation fund, provident preservation fund, retirement annuity fund and  

      benefit fund

  •  A person who is a non-resident in receipt of dividends paid by a non-resident company whose shares are listed on

      the JSE.

 

Forms

Beneficial owner declaration of status and written undertaking.

 

  •  English form

  •  Afrikaans form

 

Do I have to complete a declaration and undertaking form for exemption for each dividend or share in my share portfolio?

 

You only need to declare your exempt status per the declaration and undertaking form once (per company or withholding agent) and it will remain valid until the circumstances of the beneficial owner affecting the exemption change. Therefore, if you hold more than one share via the same regulated intermediary (withholding agent) you only need to complete one form. However, if you hold shares via more than one regulated intermediary you would have to complete the form for each regulated intermediary.

When you apply for a World Trader Account we will need to know what base currency you want to use. Before choosing your base currency think carefully which market you will be trading in the most. You have the choice of Euro (EUR), US Dollar (USD), or British Pound (GBP). The base currency is the currency used to settle your trades in and also the currency you need to transfer offshore to Absa Stockbrokers and Portfolio Management to commence trading. Always ensure you choose the right currency for the market you will be trading in to avoid excessive currency conversion fees.

 

For example:

 

Your base currency is USD and you purchase Nestle shares on the Frankfurt exchange in EURO’s. We will convert the purchase amount from Euro’s to US dollars and charge a conversion fee. If you trading in EURO’s predominantly then rather choose EUR as you base currency.

 

Once you have decided this you can then can invest by moving your money either overseas and converting it to the foreign base currency, or by converting you rands with your local bank to the base currency and then transferring this electronically to the relevant offshore bank account of Absa Stockbrokers and Portfolio Management.

Choose the correct option that applies to you to follow below:         

         

Option 1: Already have funds offshore in an offshore bank account

   

Step 1 (If currency is not the same as base currency)

You will need to instruct your bank to convert what you have into the right base currency. If you do not have Online Banking please contact your nearest forex branch.

 

Step 2 (If currency is the same as base currency)       

  •  You will receive an email with our banking details related to the relevant base currency. 

  •  Transfer the required amount electronically using the details provided to you via email.         

  •  Ensure all fields are completed especially the reference field.

 

Step 3         

For swift allocation log on to your Absa stockbroking profile and complete the ‘Notice of Deposit’ form found under ‘Your profile’.

      

Step 4         

A confirmation email will be sent once funds are allocated to your World Trader account and you can log in and start trading or investing.

        

Option 2: Need to transfer funds from local bank account offshore

 

Use Online Banking for a convenient and quick international transfer. During market open hours logon to Online Banking, navigate to ‘Payments’ then ‘International Funds Transfer’ to make the payment in currency. For more information or help please call 0860 151 151.

Please click here to watch a video showing you how the charting tool works for World Trader.