This is relating to an IT3(b) certificate from Old Mutual Wealth. The tax manager from Old Mutual Wealth is adamant that all local interest is taxable. When I look at other clients IT3(b) certificates from Stanlib it shows withholding tax and non withhold
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
We are not sure that we understand the issue raised. The principle is that interest from a source within the RSA will be gross income in the hands of the recipient. As you refer to the withholding tax, we assume the interest accrued to a foreign person (as defined in section 50A of the Income Tax Act. At issue then is whether the interest qualifies for the section 50D exemption (the exemption from the withholding tax on interest). We need more information in order to provide guidance on that issue. Interest paid (to a foreign person) by a bank, the South African Reserve Bank, the Development Bank of Southern Africa or the Industrial Development CorporationÍž or in respect of listed debt would be exempt from the tax.
We are not sure what the ‘withholding tax number’ is that you refer to. The interest would only be subject to a foreign withholding tax if the source is not within the RSA.