How are unit trusts taxed in South Africa?

How are unit trusts taxed in South Africa?

If you own bonds or cash in your unit trust, you will incur tax on the interest income they pay out. This interest income is subject to income tax, and is taxed at your marginal tax rate. Individual taxpayers enjoy an annual exemption on all South African interest income they earn, set by SARS every year.

How is income from a unit trust taxed?

The income from unit trusts and OEICs is always taxable regardless of the share class or whether the income is actually taken or reinvested. However, it may be tax free if it falls within one of the allowances (dividend allowance or starting rate for savings/personal savings allowance).

Are unit trusts exempt from tax?

Individuals who derive income from investments in property, shares, unit trusts, fixed deposits, etc. in Singapore need to pay income tax, unless the investment is exempted under the Income Tax Act.

Do you pay tax when you sell unit trusts?

Capital Gains Tax When you sell an investment in a collective investment scheme (ETF or unit trust) for more than you paid for it, the profit is known as a capital gain. The first R40,000 is exempt, but the rest is liable for Capital Gains Tax (CGT).

Are unit trusts subject to capital gains tax?

Yes, they are. In the UK any income distributions or capital growth from unit trust investments could be subject to either income and/or capital gains tax.

Does a unit trust have to distribute income?

Only net income of the trust has to be distributed, a trust can also contribute superannuation for all unit holders in proportion to their unit holding, which means that tax on income of the trust can be limited to tax rate on contribution to a superannuation fund, which at the time of writing is 15%..

Can you withdraw money from a unit trust?

You may withdraw some or all of your investment by selling the units in the Investment Account. However, should the market value of the Investment Account decrease below Allan Gray’s required minimum balance after your withdrawal(s), Allan Gray may require you to withdraw the remaining balance.

How much tax do you pay on a unit trust?

7.5% (for basic-rate taxpayers) 32.5% (for higher-rate taxpayers)

What are the disadvantages of Unit Trust?

Disadvantages of Unit Trusts

  • Unit Trusts are not allowed to borrow, therefore reducing potential returns.
  • Bid/Ask prices exist – with the price that you can buy a unit for usually higher than the price you can sell it for – making investment less liquid.
  • Not good for people who want to invest for a short period.

Is it a good time to buy Unit Trust now?

The short answer is yes. A unit trust offers a cost effective manner to access a diversified portfolio of investments. As opposed to buying individual shares and bonds to build your own portolio. This diversification can also happen across various countries, industries, asset classes etc.

How is my unit trust investment taxed?

Your unit trust investment will earn interest and dividend income, and the price of your units will reflect the changes in the market value of the underlying assets. If you are a South African resident, the interest earned is taxed in your hands per the SARS Income Tax table.

Do you pay tax on unit trust dividends in South Africa?

If you are a South African resident, any dividend income earned by the unit trust is subject to a withholding tax. This withholding tax rate is presently 15% (on local dividends). Again, this does not apply if you buy your unit trust through your Tax-free Savings Account.

When do you pay CGT on unit trust?

CGT applies every time you sell out from a unit trust investment. In this case, you’ll pay SARS CGT on a tax rate of 25%. Note that an exemption of R10,000 applies for individuals.

How does HMRC policy work with investment funds?

The policy team works closely with the Collective Investment Schemes Centre (CISC). CISC is an HMRC operational team which is the first port of call for funds-related enquiries from HRMC staff as well as from funds, fund administrators and professional advisers.