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. The first R23 800 of interest income you earn in any year is not taxed. Any interest income you earn via your Tax-free Savings Account is also exempt.

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.

If you are a South African resident, any capital gain realised on the sale of units is subject to Capital Gains Tax. Presently, the first of R40 000 of your capital gain in any year is not taxed. Of the balance, 40% is included in your taxable income and taxed per the Income Tax table. The effective maximum tax rate that can be applied to your capital gain is 16,4% at present.

The information and answers supplied in this section do not constitute advice as defined by the Financial Advisory and Intermediary Services Act, 37 of 2002.

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