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HOW TO CLAIM TAX REFUNDS
Head of Operations
Mar 28, 2023
Internationally, revenue authorities impose a withholding tax on the dividends paid by companies listed on exchanges in their jurisdictions. The percentage withheld depends on each jurisdiction but generally ranges from 5% to as high as 35%.
The dividends of companies that trade on multiple exchanges (dual-listed shares) can be subject to double taxation if both the country of listing and the country of incorporation impose DWT. There are various tax treaties between jurisdictions worldwide that seek to avoid double taxation on income. If the DWT rate charged by a particular jurisdiction exceeds the maximum rate allowed under the tax treaty, the shareholder is entitled to a refund of tax from that jurisdiction.
For example, take Richemont shares trading on the JSE. Dividends paid by Richemont are subject to Swiss DWT of 35%. As the company trades on the JSE, the dividend is also subject to South African DWT at a rate of 20% (unless an exemption from South African DWT applies, for example, for South African company shareholders).
In accordance with the tax treaty between Switzerland and South Africa, South African shareholders are generally subject to a maximum Swiss DWT rate of 15%. The resultant outcome for a South African shareholder (that does not qualify for an exemption from South African DWT) is as follows:
South African shareholders who do not lodge a claim with the Swiss tax authority will be subject to an effective tax cost on Swiss dividends of 40%.
The process of claiming refunds from foreign tax authorities is highly onerous, involving submission (sometimes via postal service delivery) of various documents supporting the claim. As a result, the majority of non-institutional shareholders generally forfeit these refunds – which can, over time, run into thousands of rands.
To assist our clients in claiming refunds on DWT, Sanlam Private Wealth has partnered with specialist service provider GTR. The service applies to South African resident and non-resident clients, as well as local (JSE-listed) and foreign shares.
We don’t levy any additional fee for this service. GTR charges 20% of any refund it is able to recover. No fee is charged for unsuccessful claims, and there is no minimum cost. To date, our partnership with GTR has returned R8.6 million on 1 625 client accounts (after deducting charges), with significant recoveries expected for the remainder of 2023 and onwards.
If you’ve not already done so, you can sign on for this service by completing a short authorisation form which will be sent to you shortly. After you’ve returned the form, no further involvement is required from you, unless specific documentation is requested by a tax authority. Refunds (net of cost) will be deposited into your Sanlam Private Wealth trading account as soon as they’ve been received.
Kindly note that you can’t engage the services of multiple service providers. If you already have an existing DWT recovery service provider, you won’t be able to make use of the GTR service.
Please do not hesitate to contact your portfolio manager if you need any further information.
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Sanlam Private Wealth (Pty) Ltd, registration number 2000/023234/07, is a licensed Financial Services Provider (FSP 37473), a registered Credit Provider (NCRCP1867) and a member of the Johannesburg Stock Exchange (‘SPW’).
All reasonable steps have been taken to ensure that the information on this website is accurate. The information does not constitute financial advice as contemplated in terms of FAIS. Professional financial advice should always be sought before making an investment decision.
Participation in Sanlam Private Wealth Portfolios is a medium to long-term investment. The value of portfolios is subject to fluctuation and past performance is not a guide to future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. The net of fee calculation assumes a 1.15% annual management charge and total trading costs of 1% (both inclusive of VAT) on the actual portfolio turnover. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available upon request.
COLLECTIVE INVESTMENT SCHEMES
The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium to long-term investments. Past performance is not a guide to future performance, and the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved manager in collective investment schemes in securities (‘Manager’).
Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in a portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of a portfolio and an investor will differ depending on the initial fees applicable, the actual investment date, date of reinvestment of income and dividend withholding tax. Forward pricing is used.
The performance of portfolios depend on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-dividend date. Portfolios may invest in other unit trusts which levy their own fees and may result is a higher fee structure for Sanlam Private Wealth’s portfolios.
All portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No. 45 of 2002. Funds may from time to time invest in foreign countries and may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information. The manager may close any portfolio to new investors in order to ensure efficient management according to applicable mandates.
The management of portfolios may be outsourced to financial services providers authorised in terms of FAIS.
TREATING CUSTOMERS FAIRLY (TCF)
As a business, Sanlam Private Wealth is committed to the principles of TCF, practicing a specific business philosophy that is based on client-centricity and treating customers fairly. Clients can be confident that TCF is central to what Sanlam Private Wealth does and can be reassured that Sanlam Private Wealth has a holistic wealth management product offering that is tailored to clients’ needs, and service that is of a professional standard.