Declaring Dividends in SA Return

Declaring Dividends in SA Return

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I have a new client who has recently informed me that they want me to declare dividends not yet received from an old limited company which still holds money.

He has stated his old accountant used to produce his tax return and then they used to adjust the dividends on the tax return to just below the 40% threshold and pay those from the company at around the same time.

My understanding has always been that dividends are reported in the year in which they are paid. So any dividends removed from the company since April 2014 should be reported in the 14/15 return however as you can imagine I am now questioning myself.

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By johngroganjga
09th Dec 2014 11:01

You are right.  But "paid" is

You are right.  But "paid" is a weasel word.  It includes dividends voted and credited to a loan account.

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Euan's picture
By Euan MacLennan
09th Dec 2014 11:08

Declared to be payable

A dividend should be disclosed in a tax return for the year in which it was declared to be payable or was actually paid.  It is possible that a dividend might be declared on 31st March to be paid on 30th April, in which case it would be income of the second tax year.  It is also possible that a dividend might be declared as payable on 31st March, but credited to a DLA for drawdown later, rather than actually paid at the time, in which case it would be income of the earlier tax year.  This latter possibility is the route which the previous accountant appears to have taken.  It is up to you whether you are prepared to declare dividends retrospectively.

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RLI
By lionofludesch
09th Dec 2014 11:21

Slippery Slope

Make sure you've got plenty of documentary evidence.

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By andy.partridge
09th Dec 2014 11:26

@ OP

I'm with you. Stick to your guns, unless there is clear evidence of the dividends being voted at an earlier date.

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RLI
By lionofludesch
09th Dec 2014 11:36

Me too

The proposal sounds dodgy to me.

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