How would some­one know to pay ?

Finweek English Edition - - Creating Wealth - David French

THE RE­CENTLY PUB­LISHED draft Rev­enue Laws Amend­ment Bill 2008 pro­poses an en­tirely new tax on div­i­dends – in­no­va­tively named the “div­i­dend tax”. It’s in­tended to re­place the Secondary Tax on Com­pa­nies (STC) that’s been in place for some years. Most im­por­tantly the div­i­dend tax is in­tended to be a tax on the share­holder, whereas the STC was a tax on the com­pany.

The pro­pos­als in the draft Rev­enue Laws Amend­ment Bill re­quire that the tax­payer (ie, the share­holder) must pay the div­i­dend tax to the SA Rev­enue Ser­vice by the end of the month fol­low­ing the month in which the div­i­dend is paid.

Th­ese same pro­pos­als re­quire the com­pany pay­ing the div­i­dend must with­hold tax against that div­i­dend and that pay­ment of this with­hold­ing tax must also be made to Rev­enue by the end of the month fol­low­ing the month in which the div­i­dend was paid. There­fore, the com­pany must com­plete both trans­ac­tions on ex­actly the same day.

A share­holder now has a dilemma. In or­der to ful­fil his obli­ga­tions in terms of the draft law, the tax­payer must make pay­ment by a cer­tain date. How­ever, he’s aware that some­one else has with­held the tax and should pay that tax over on his be­half. But the tax­payer has no proof that this pay­ment has ac­tu­ally been made by the time he be­comes li­able to pay.

So what must the tax­payer do to en­sure his li­a­bil­ity is paid on time and, per­haps more im­por­tantly, to en­sure he in­curs no in­ter­est on the li­a­bil­ity? There seems to be noth­ing in the draft Bill that re­lieves the tax­payer from any obli­ga­tion for the div­i­dend tax – or, for that mat­ter, in­ter­est on the div­i­dend tax in the event that tax was with­held by the com­pany pay­ing the div­i­dend but not ac­tu­ally paid over to Rev­enue.

Surely it would be ap­pro­pri­ate to pro­vide that where the tax­payer can prove the com­pany with­held the tax, then that tax­payer can es­cape li­a­bil­ity, par­tic­u­larly for in­ter­est, if the amount with­held wasn’t ac­tu­ally paid over to Rev­enue by the due date?

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