- Vukile Property Fund declares a gross cash dividend of 65.11232 cents per share from income reserves for the year ended March 31, 2023.
- Shareholders advised that the dividend is subject to tax implications, with South African tax residents required to include it in their gross income.
- Non-resident shareholders may be eligible for an exemption from income tax, but a 20% dividend withholding tax rate will apply unless a reduced rate is applicable based on a Double Taxation Agreement (DTA).
Vukile Property Fund Limited announced the declaration of a gross cash dividend of 65.11232 cents per share for the fiscal year ended March 31, 2023. The dividend, derived from income reserves, meets the qualifying distribution requirements as prescribed by the Income Tax Act.
Vukile, listed on both the Johannesburg Stock Exchange (JSE) and the Namibian Stock Exchange (NSX) under the share codes VKE and VKN respectively, has confirmed that the distribution will be deemed a dividend for South African tax purposes under section 25BB of the Income Tax Act. Shareholders, particularly South African tax residents, are advised that the dividend will be subject to certain tax implications.
South African tax residents must include the dividend in their gross income as it does not qualify for exemption under section 10(1)(k)(i) of the Income Tax Act. This is due to paragraph (aa) of the proviso, which stipulates that dividends distributed by a REIT are not eligible for income tax exemption. However, the dividend will be exempt from dividend withholding tax for South African tax resident shareholders.
To qualify for the exemption, shareholders are required to furnish their Central Securities Depository Participant (CSDP) or broker with a declaration stating that the dividends are exempt from dividend tax. Additionally, they must provide a written undertaking to inform the CSDP or broker if there are any changes in circumstances affecting the reduced rate or the beneficial ownership of the shares. The necessary forms for exemption can be obtained from the Commissioner for the South African Revenue Service.
Non-resident shareholders, on the other hand, will enjoy an exemption from income tax on the dividend under section 10(1)(k)(i) of the Income Tax Act. However, a dividend withholding tax rate of 20% will be applied unless a reduced rate is applicable based on the Double Taxation Agreement (DTA) between South Africa and the shareholder’s country of residence.
Non-resident shareholders seeking to benefit from a reduced dividend withholding tax rate must submit the required forms to their CSDP or broker. These forms include a declaration stating that the dividend is subject to a reduced rate due to the application of a DTA, as well as a written undertaking to inform the CSDP or broker of any changes affecting the reduced rate or the beneficial owner’s status.
The net dividend amount payable to non-resident shareholders, after the application of a 20% dividend withholding tax, will be 52.08986 cents per share. Shareholders are advised to liaise with their CSDP or broker to ensure the necessary documentation is submitted prior to the payment of the distribution.
Vukile Property Fund Limited has provided a timetable for the dividend payment, as follows:
- Last day to trade cum dividend distribution: Tuesday, June 27, 2023
- Shares trade ex dividend distribution: Wednesday, June 28, 2023
- Record date: Friday, June 30, 2023
- Payment date: Monday, July 3, 2023
During the period from Wednesday, June 28, 2023, to Friday, June 30, 2023, inclusive, share certificates will not be eligible for dematerialization or rematerialization. Dematerialized shareholders will have the dividend transferred to their CSDP accounts or broker accounts on Monday, July 3, 2023. Certificated shareholders will receive their dividend payments in their bank accounts on or around Monday, July 3, 2023.
Vukile Property Fund Limited currently has 1,036,226,628 shares in issue, and its income tax reference number is 9331/617/14/3.