CSPROP, the CoreShares SA Property Income ETF, has announced its dividend distribution for the three months ended June 30, 2023. The distribution carries certain tax implications for both South African tax residents and non-residents.
According to the recent announcement, CSPROP will distribute an aggregated amount of 24.51953 cents per security to its shareholders. However, it is crucial to be aware of the tax considerations associated with this distribution, depending on the investor’s tax residency status.
Table 1: Dividend Distribution Details
| Distribution Source Type | Foreign | SA Listed | Foreign | SA Listed | Local |
|---|---|---|---|---|---|
| Net Distribution Reinvested | No | No | No | No | N/A |
| Source of Funds (Country Code) | IM | ZA | ZA | N/A | N/A |
| Subject to Foreign Withholding Tax | Yes | No | No | No | N/A |
| Gross Foreign Rate (cents per unit) | 1.22260 | 0.057070 | N/A | N/A | N/A |
| Foreign Tax % withheld at source | 1.29396% | N/A | N/A | N/A | N/A |
| Foreign Tax amount per unit | 0.01582 | N/A | N/A | N/A | N/A |
| DTA with Source Country | 10.00000% | N/A | N/A | N/A | N/A |
| Foreign Tax Reclaim % | N/A | N/A | N/A | N/A | N/A |
| Portfolio/Management Cost | N/A | N/A | N/A | N/A | N/A |
| Interest Expense | N/A | N/A | N/A | N/A | N/A |
| Other Expense | N/A | N/A | N/A | N/A | N/A |
| Gross ZA Distribution (Cents per unit) | 1.20678 | 0.057070 | 0.26029 | 22.99539 | 24.51953 |
| Gross Local Rate (cents per unit) | 1.22260 | 0.057070 | 0.260290 | 22.99539 | N/A |
| SA Withholding Tax % | 20.00000% | N/A | N/A | N/A | N/A |
| SA Withholding Tax amount per unit | 0.24452 | N/A | N/A | N/A | N/A |
| Local Net Rate | 0.96226 | 0.057070 | 0.260290 | 22.99539 | N/A |
The net rate for local REIT distributions for non-residents, after deducting South African withholding tax, is 18.39631%.
CSPROP has provided specific instructions for investors to ensure a smooth distribution process. South African tax residents eligible for exemption from dividend withholding tax must provide their CSDP or broker with the following documents:
- A declaration stating that the distribution is exempt from dividends tax
- A written undertaking to inform their CSDP or broker if there are any changes in circumstances affecting the exemption or if they are no longer the beneficial owner.
However, non-exempt South African shareholders will be subject to a 20% withholding tax on the distributed dividends.
For non-resident investors, the dividend distribution will be exempt from income tax under section 10(1)(k)(i) of the Act. However, a dividend withholding tax of 20% will be applicable unless a reduced rate is established through a Double Taxation Agreement (DTA) between South Africa and the investor’s country of residence. Non-resident investors must provide their CSDP or broker with the following forms to qualify for the reduced withholding tax rate:
- A declaration stating the reduced rate due to the application of a DTA
- A written undertaking to inform the CSDP or broker of any changes affecting the reduced rate or their beneficial ownership.
It is crucial for both South African tax residents and non-residents to submit the necessary documentation as prescribed by the South African Revenue Service before the distribution payment date.
The distribution will be made on Monday, July 17, 2023. Shareholders are advised to take note of the following dates:
- Last day to trade cum distribution: Tuesday, July 11, 2023
- Ex-date: Wednesday, July 12, 2023
CSPROP operates as a portfolio in the CoreShares Index Tracker Collective Investment Scheme and is managed by CoreShares Index Tracker Managers (RF) Proprietary Limited. Grindrod Bank Limited serves as the sponsor of the ETF.
Investors, both resident and non-resident, are strongly encouraged to consult their professional advisors for personalized guidance on their specific tax situations and the appropriate actions to take.
