How tax works on your EasyEquities USD account depends on a number of factors, including but not limited to the following:
- Which country you reside (live) in
- How that particular country in which you reside treats taxation
- What tax treaties / agreements the country you live in has with the United States of America (where you are investing
South African Residents
1. Residence-based tax system
South Africa has a residence-based tax system, which means all South African residents are, subject to certain exclusions, taxed on their worldwide income, irrespective of where their income was earned.
2. Double-taxation agreement with US
South Africa also has a double-taxation agreement with the USA, which governs how taxes will be charged and paid between the two countries.
3. Dividends Withholding tax
Dividends Withholding tax charged against dividends paid to clients holding instruments available in an EasyEquities USD account, will be paid at 15%. In terms of the mechanics, when we pay you a dividend, we will charge the 15% against that dividend (listed as a separate line item in your transactions), and pay that amount to the Internal Revenue Service (IRS) in the USA. You needn't do anything.
4. Annual tax certificate
Two to three months after the end of every South African tax year (end-February), EasyEquities will issue a tax certificate pertaining to all investment activity in your EasyEquities USD account, which clients can download from the Reports section of the site. This tax certificate should be used by the client in the submission of their annual tax return.
5. Capital Gains Tax
If you have made a capital gain on the sale of an instrument / instruments within your EasyEquities USD account within the tax year, then you may need to pay capital gains tax (depending on the amount of the gain), per the usual South African tax rules pertaining to Capital Gains.
Residents of other countries outside of South Africa
1. Tax certificate
EasyEquities will produce a tax certificate in April / May each year, detailing the activity in your EasyEquities USD account from 1 March of the preceding year to end-February of that current year. (The South Africa tax year).
It is your responsibility to understand how your tax system works, and whether your country of residence has any tax agreements / treaties with the United States so you can determine how you need to handle any possible taxation owing on the activity of your Investing within the EasyEquities USD account.
2. Dividends tax
Based on the residence of the client, Dividends tax will be charged according to the rate specified in the IRS table for that country in which the client resides. If the client is from a country that does not have a tax treaty with the US (and therefore does not have a Dividends tax rate specified on the IRS table) they will pay Dividends Tax on all dividends paid to them, at 30%.