How dividends tax is collected
Dividends tax is charged on the shareholder, but you never pay it yourself. The company paying the dividend, or the regulated intermediary that holds your shares (your broker, bank or investment platform), deducts 20% before the money reaches you and pays it to SARS. The withholding agent must pay it over by the last day of the month after the month in which the dividend was paid, together with the DTR01 and DTR02 returns. If the agent fails to withhold, you as the beneficial owner are still liable.
Because local dividends are exempt from normal income tax, the amount withheld is the end of the matter for a South African individual. Dividends do not push up your taxable income or your PAYE, which is why a large dividend does not change your bracket the way a bonus does.
Worked example: a JSE dividend
You own 1,500 shares and the company declares a final dividend of 425 cents a share. The gross dividend is 1,500 × R4.25 = R6,375.00. Your broker withholds R1,275.00 and pays you R5,100.00. Had the same shares been held in a tax-free savings account, you would have received the full R6,375.00, because the dividends tax exemption for tax-free investments applies.
Paying yourself from your own company
For an owner-managed Pty Ltd, the dividend comes out of profit that has already been taxed. Take a company with R400,000 profit before tax. It pays R108,000 company tax at 27%, leaving R292,000 to declare as a dividend. Dividends tax takes R58,400, and R233,600 reaches you. The combined tax is 41.6% of the original profit.
Compare that with your marginal income tax rate. A salary is deductible for the company, so it is taxed once, at your rate. If that rate is below the combined 41.6%, a salary usually costs less tax overall; in the 45% bracket a dividend costs less. The salary vs dividend calculator runs that comparison, and the company tax calculator works out the company's side.
From company profit to your bank account
Each row assumes the whole after-tax profit is paid out to an individual shareholder at the standard rates.
| Profit before tax | Company tax | Dividend | Dividends tax | You receive |
|---|---|---|---|---|
| R100,000 | R27,000 | R73,000 | R14,600 | R58,400 |
| R250,000 | R67,500 | R182,500 | R36,500 | R146,000 |
| R500,000 | R135,000 | R365,000 | R73,000 | R292,000 |
| R1,000,000 | R270,000 | R730,000 | R146,000 | R584,000 |
| R2,000,000 | R540,000 | R1,460,000 | R292,000 | R1,168,000 |
The combined rate stays at 41.6% at every level, because both taxes are flat. That is different from a salary, where the rate climbs with each bracket.
Who does not pay dividends tax
The exemptions depend on who receives the dividend, not on the company paying it. SARS lists, among others: South African resident companies, national, provincial and local government, approved public benefit organisations, pension, provident, preservation, retirement annuity and benefit funds, and an individual whose shares sit in a tax-free investment. A dividend that is already taxed as part of the recipient's income is also exempt, so it is not taxed twice.
The exemption is not automatic. The recipient must give the company or broker a declaration that it qualifies and a written undertaking to report any change, before the dividend is paid. Dividends between companies in the same group and dividends paid to a regulated intermediary are the exceptions and need no forms. SARS may limit the life of a declaration to five years, so funds and companies should renew theirs.
Non-residents and foreign dividends
A non-resident shareholder pays the same 20% unless a double tax agreement sets a lower rate. Reduced treaty rates mostly benefit a foreign company that owns a meaningful stake, and the shareholder has to declare its status to the company or broker first; otherwise the full rate is withheld and a refund claimed later.
Going the other way, a South African resident who receives dividends from foreign shares pays a maximum effective rate of 20%, and no expenses can be deducted against foreign dividends. A cash dividend from a foreign company whose shares are listed on the JSE has dividends tax withheld locally, in the same way as a dividend from a local company.
Dividends in specie
When a company distributes an asset instead of cash, such as shares in a subsidiary or a property, the rule flips: the company paying the dividend is liable for the dividends tax, at 20% of the market value of what it hands over. The shareholder receives the asset in full and nothing is withheld from it.
Frequently asked questions
What is the dividends tax rate in South Africa?
20% of the gross dividend, for dividends paid on or after 22 February 2017. Before that date it was 15%. SARS confirmed no change for the 2026/27 year. The rate is flat, so a R100 dividend and a R1 million dividend are taxed at the same 20%.
Do I have to declare dividends on my tax return?
Local dividends are exempt from income tax, so they do not increase your taxable income and you do not pay more income tax on them. For a resident individual the 20% withheld is the final tax on a local dividend, so there is nothing further to pay on assessment.
How do I work out the gross dividend from what I received?
Divide the net amount by 0.8. If R20,000 landed in your account after dividends tax, the gross dividend was R25,000 and R5,000 was withheld. Choose "Amount I received" in the calculator to do this for any figure.
Are dividends in a tax-free savings account taxed?
No. A dividend on shares or unit trusts held in a tax-free investment is exempt from dividends tax, so the full amount stays invested. Dividends inside the account also do not count towards your annual or lifetime contribution limits.
Who is exempt from dividends tax?
South African resident companies, the three spheres of government, approved public benefit organisations, pension, provident, preservation and retirement annuity funds, and individuals holding the shares in a tax-free investment, among others. Each must give the company or broker a declaration and undertaking before the dividend is paid.
What if tax was withheld but I was exempt?
If the declaration and undertaking reached the company or broker too late, it must withhold the full 20%. The beneficial owner then has three years from the payment to submit the forms and claim the tax back from whoever withheld it.
Is it better to pay myself a salary or dividends?
It depends on how much you take out. Profit paid as a dividend has already carried 27% company tax, and the 20% dividends tax brings the combined rate to 41.6%. A salary is deductible for the company but taxed at your marginal rate of up to 45%, plus UIF. The salary vs dividend calculator compares both for your figures.
Do non-residents pay 20% dividends tax?
The default is 20%, but a double tax agreement between South Africa and the shareholder's country can reduce it. The lower treaty rates usually apply to a foreign company holding a set percentage of the shares, often 10% to 25%. The shareholder must submit a declaration to the company or broker to get the reduced rate.