We all need to pay our taxes, else the state will be underfunded and will be unable to deliver or perform.

So the dividend withholding tax (DWT) warrants no more than cursory attention. 

Having long been flagged by the state as a 10% tax, it starts (next week) at 15%. That is 50% higher than expected - or is it?

Lets take a look:-

                                                                              STC @ 10%            DWT @ 15%

Profit available for distribution                   110 000                                 110 000

Dividend declared                                        110 000                                 110 000

STC Cost /DT Cost                                        10 000                                    16 500

Dividend received by Shareholder            100 000                                    93 500

Shareholder worse off by                            ------                                            6 500 (65%)

Now of course, the SARS account is worse off by the STC, but the net effect is harsh.

I wonder what the longer term effects will be?

Cheers

Stuart

PS.

A must-read in this area is Ivo vegter's piece http://dailymaverick.co.za/opinionista/2012-03-27-tax-why-align-with-most-other-countries

If you have read any Vegter, you would be unsurpised by his tone or content. An example:-

"More generally, taxing something discourages it. You tax smoking or drinking when you want less of it."