A Dividend Withholding Tax Exemption A PBO approved in terms of Section 30 of the Income Tax Act is exempt from income tax in terms of Section 10(1)(cN) as read with Section 64F(c) in respect of dividends. As regards the prescribed SARS Declaration and Un
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
Note, there is a difference between the section 10(1)(cN), and section 10(1)(k) for that matter, exemption from normal tax and the exemption from the withholding tax in section 64F.
Your request relates to the obligation of the company to withhold the tax. Section 64G(2), as you correctly pointed out, then reliefs the company (payee) from withholding the dividends tax, but it requires the public benefit organisation (approved by SARS) to have submitted to the company:
“… a declaration by the beneficial owner … that the dividend is exempt from the dividends tax in terms of section 64F; and … a written undertaking … to forthwith inform the company in writing should the circumstances affecting the exemption applicable to the beneficial owner … change or the beneficial owner cease to be the beneficial owner…”
In both instances it refers to “in such form as may be prescribed by the Commissioner”. Both use the word “may” and that indicates that SARS doesn’t have to prescribe a form, but they may choose to do so. The obligation to submit the declaration to the paying company is however not optional – it must be done and if not, the tax must be withheld. The declaration can then be in any form the beneficial owner chooses to use.
SARS confirms this in their SARS_External BRS_2013_Dividends Tax_v1.0.0.docx guide – page 71 and states as follows:
“Please note that SARS has not issued the actual form to be used but has prescribed the required wording and minimum information to be provided.”
The example of the declaration they provided on that page “represents the data requirements in respect of the declaration that the beneficial owner must submit to the entity paying the dividend to declare that the beneficial owner is exempt.”
So, the form used by the public benefit organisation must contain the information in this example.