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
- 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.
- 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.
- Dividends Withholding tax
Dividends Withholding tax, which is charged against dividends that have been paid to those who hold instruments available in an EasyEquities USD account, will be paid at 15%. This is handled by EasyEquities and there is no action needed from you. When a dividend is paid out to you, 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.
- 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 you can download from the Reports section in your account. You'll need to use this tax certificate in the submission of your annual tax return.
- 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
- Tax Certificate
EasyEquities will produce a tax certificate 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.
- Dividends Tax
Dividends tax will be charged according to the rate specified in the IRS table for the country where you live. If you are 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) you will pay dividends tax on all dividends paid to them, at 30%.