The unexpected retroactive increase in dividend tax has caused consternation among listed companies that have declared but not yet paid dividends. On Friday, a slew of companies that have recently declared dividends were forced to issue Sens announcements informing shareholders the after-tax dividend paid out would be reduced in line with the budget announcement. On Wednesday Finance Minister Pravin Gordhan announced dividend tax would be increased to 20% from 15%. SA Institute of Tax Professionals CE Keith Engel described the increase in dividend tax as a "collateral consequence of the increase in the top income tax rate". Tax experts say while an increase in the top income tax bracket was expected, no one appears to have realised the Treasury would increase dividend tax to discourage arbitrage among top income earners. The move is directed at individuals who are in a position to reduce their income and increase their dividends to avoid the impact of the new 45% income tax bracket....
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