When is REIT dividends taxable in the hands of the recipient? On the date when it is declared by the REIT or the date that it is paid to the shareholder? According to the IT3, it is the date paid. According to the general rule in the definition of gross i
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
In terms of paragraph (e)(iii) of the definition, in section 1(1) of the Income Tax Act, “company” includes any portfolio of a collective investment scheme in property that qualifies as a REIT as defined in the listing requirements of an exchange approved in consultation with the Minister and published by the Prudential Authority, as defined in section 1 of the Financial Markets Act, in terms of section 11 of that Act.
A distribution from such a scheme would therefore constitute a ‘dividend’ as defined in section 1(1) of the Act and is included in gross income when received or accrued by the individual – see paragraph (k) of the definition of “gross income”. In terms of proviso (aa) to section 10(1)(k)(i) “… this exemption shall not apply –
(aa) to dividends (other than those received by or accrued to or in favour of a person that is not a resident or a dividend contemplated in paragraph (b) of the definition of 'dividend') distributed by a company that is a REIT, or a controlled company as defined in section 25BB; ..”