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News & Press: SARS operational & eFiling questions

Where do you disclose a REIT dividend on the new trust return?

30 June 2015   (1 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Do you know where one would insert the REIT dividend on the new trust return?  I know it is a local dividend which must be taxed. Should it be included under ‘Other Income’?

A: The distribution from REIT consists of multiple sources and if declared against the wrong code a SARS review letter would be received. 

Principally dividends distributed by a REIT must be disclosed as dividends and interest paid as interest.  Dividends distributed by a REIT will be subject to dividends tax, after any applicable exemptions or reductions. Such dividend will be included in the shareholder's gross income (paragraph (k) of the definition of "gross income” in section 1(1) of the Income Tax Act) and will not qualify for a dividend exemption (section 10(1)(k)(i)(aa)). 

An amount of interest received by or accrued to a person during a year of assessment in respect of a debenture forming part of a linked unit in a REIT, is deemed to be a dividend received by or accrued to the person (section 25BB(6)(a)).  Such amount will however not qualify for a dividend exemption (section 10(1)(k)(i)(aa)) and will therefore be subject to normal tax in the shareholder's hands. The interest is also deemed to be a dividend by the REIT for dividends tax purposes (and not interest paid by the REIT for purpose of Interest Withholding Tax) (section 25BB(6)(c)). The amount will therefore be subject to dividends tax, after any applicable exemptions or reductions. 

That is why it is best to obtain the analysis from the REIT – they normally provide it with the codes to be used on the IT12.  

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.

Comments...

Ingrid V. Angus says...
Posted 03 July 2015
Thanks, but I still don't know where the amount must be inserted on our 2015 Tax return?

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