Scramble follows dividend tax announcement
The unexpected retroactive increase in dividend tax has caused consternation among listed companies that have declared but not yet paid dividends, says a Business Day report. On Friday, a slew of companies that have recently declared dividends were forced to issue Sens announcements informing shareholders the after-tax dividend paid out would be reduced in line with the budget announcement.
This follows Finance Minister Pravin Gordhan’s announcement that dividend tax would be increased to 20% from 15%. Tax experts say while an increase in the top income tax bracket was expected, no one appears to have realised the Treasury would increase dividend tax to discourage arbitrage among top income earners. The move is directed at individuals who are in a position to reduce their income and increase their dividends to avoid the impact of the new 45% income tax bracket.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
