Where do you disclose a REIT dividend on the new trust return?
30 June 2015
Posted by: Author: SAIT Technical
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’?
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.
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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
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