Tax and Investments

Here is the first in a series of articles on the taxation of investments.   Below, we take a look at tax issues relating to Investments into local collective investment schemes (unit trusts) via, for example, Momentum Wealth, Glacier, for individuals.

To do so, we first break down some key terms:


Income earned is taxed in your hands at your marginal rate of tax.  There is an annual exemption of R23 800 (for persons under 65) and R34 500 (for persons over 65).

If a capital gain is realised when you sell unit trusts it can be subject to CGT which is an effective 13.3%, if you are at the maximum rate of tax.  Individuals are allowed an annual exclusion of R30 000.    For example, if you are at the maximum tax rate, if a gain of R200 000 is realised, you would minus the R30 000 which leaves R170 000;   13.3% of R170 000 is R22 610 which would be the CGT incurred.

It is important to note, however, that CGT is triggered when you sell out of a unit trust, whether or not it is to switch into another unit trust or into cash.

This information on capital gains was updated on 29 March 2016.  Click here to view the update “Update on Tax and Investments”

A Dividend Withholding Tax (DWT) of 15% is withheld from dividends received. You receive the dividends net of DWT.

The investment will be payable to your estate.  It will be deemed an asset in your estate and will be distributed according to the dictates of your will.

With regard to insolvent estates, the investment will be part of the insolvent estate and will be attached by creditors.

At the end of each tax year, you will receive an IT3(b) and an IT3(c ) which will provide details of what you have earned, which you then include with your tax return.

For taxation on non-voluntary money click here to read our articles on Preservation funds Q&A, Retirement annuities Q&A, Life and Living annuities Q&A.

Sourced from Momentum and SARS Tax Guide.