I am in the process of completing a company income tax return. The company earned foreign dividends of R35 367 and was charged foreign dividend tax of R11 209. I would like some advice on how to correctly declare the income and the claim the foreign tax
From the information provided, we accepted that the company doesn’t qualify for any of the section 10B(2) exemptions.
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
One start by answering “Y” to the next questions (on the form):
“Did the company receive any foreign dividends?”
“Will the company be claiming any Foreign Tax credits not relating to Capital Gain transactions in terms of s6quat and/or a treaty?”
Under the heading “Non-Taxable Amounts Credited to the Income Statement”, click on “Exempt foreign dividends (s10B)” and capture the amount determined by using the ratio of the number 8 to the number 28.
You then capture the foreign tax (the full amount) next to:
“Foreign Tax Credits: Taxable Foreign Sourced Income of Resident Companies – s6quat (excluding foreign capital gain / loss)”
In the blocks next to “Foreign Tax Credit (Rand value)”.